zak! Designs Transforms Licensing Operations with Automated Royalty Management

 zak! Designs creates and distributes themed kitchenware, dinnerware, and drinkware. Since their first big licensing agreement for The Little Mermaid in 1989, they have built their business by licensing popular properties including Mickey Mouse, Spider-Man, Bluey, and Hello Kitty. Now in their 50th year, roughly 80% of zak!’s products feature licensed properties.

“If you have a plate with Batman or Barbie on it, there’s a 90% chance it was made by us. We’ve been focusing on hydration over the past 15 years and are and have been for some time the industry leader in licensed kids’ characters.”  

Although zak!’s ERP contained functionality to calculate royalties, it couldn’t handle complex contract terms. Royalties for products that used a combination of licenses, for example, one license for drinkware technology and another for a featured character, had to be calculated manually.

In addition, minimum guarantees, variable rates, and caps on tariffs and discounts all require manual calculation. Tariffs in particular presented a potentially costly problem, as one of their licensors allows them to take a deduction for tariffs, however they had no way to effectively calculate that. This would have resulted in an overpayment in the millions.

zak! works with 31 licensors, all of which conduct audits at regular intervals. Since zak! had to manually calculate complex royalties and had very little visibility into their audit trails, they had to piece together each audit defense.

“Over the next few years, tariffs will probably play a significant role and we need to be able to handle them. We also couldn’t always lay hands on the information we needed to respond to an audit. We’re always in an audit and the effort is fairly extensive.” 

FADEL Managed Services performed the initial IPM Suite setup for zak! Designs, uploading contract terms and ensuring their implementation followed best practices. This gave zak! peace of mind that everything was programmed correctly so they can confidently submit royalty reports and respond to audits going forward. IPM Suite not only automates royalty calculations for even the most complex contract terms, it performs compliance checks to help zak! ensure product distribution adheres to agreement terms.

“We were looking for a partner that knew about contracts and could help us deliver accurate royalty reports and payments. It was also really important to us that the company we partnered with already had experience with our top licensors. FADEL fit the bill and, after looking at six or seven solutions, their software stood out as far as ease of use—it just made sense to people.”

“Our implementation timeline was really tight. We achieved that timeline and got an excellent result. This project went as smoothly as it possibly could—it was on budget, it was on time, and the result has been exactly what we were looking for. 

Operations are greatly streamlined. We no longer have to do the manual workarounds for the things our ERP didn’t calculate. We no longer have to look for the exceptions—IPM Suite points them out to us. We’re probably saving 30-40 hours a month, but the biggest ROI will come during an audit. One finding avoided will more than pay for the software.

With IPM Suite, our royalties are going to be correct and our licensors are going to be happy. We’re going to be giving them what they want.”