Strategic Negotiation Points for Licensing

 The royalty rate is completely negotiable and should be tied to market dynamics. High-velocity consumer products with razor-thin margins typically warrant lower percentages. Consider structuring a tiered royalty system—start with a premium rate that steps down when the licensee is compelled to compete on price. This protects your upside while acknowledging market realities.

 If your licensee has legitimate international distribution capabilities, grant worldwide rights—but only with ironclad performance benchmarks. No free rides on untapped markets. Build in territorial forfeiture provisions if they fail to meet agreed-upon milestones. 

 Monthly reporting with quarterly payments is standard, though licensees will push for quarterly reporting to minimize administrative burden. Don't budge on monthly sales reports—you need real-time visibility into performance. Cash flow is king.

 Licensees love term limits—ignore them. As long as they're moving product and meeting minimums, the agreement continues. Period. Your intellectual property doesn't have an expiration date, and neither should your revenue stream. 

 You're not running a charity. Set realistic but meaningful minimums that ensure the licensee is committed to actual commercialization, not just blocking competitors.

 If you're dealing with complex technology requiring substantial knowledge transfer, your expertise isn't free. Structure separate consulting arrangements for implementation support. Don't give away valuable know-how under the guise of 'partnership.