Brand Licensing [How It Works, Benefits & Real-Life Examples]

Brand Licensing: Key Takeaways

• Brand licensing allows brand owners (licensors) to legally authorize other parties (licensees) to use their assets under defined terms, in exchange for royalties and fees

• Brand licensing helps companies expand their reach, diversify products, build consumer loyalty, and boost revenue

• One example of brand licensing is McDonald’s teaming up with entertainment franchises to include branded toys in its Happy Meals

The Walt Disney Company led all global licensors in 2024, with an estimated $62 billion in retail sales of licensed products, continuing its strong growth momentum.

Central to this success is Disney’s strategic use of brand licensing, which enables partners to tap into the emotional pull consumers have with its iconic franchises.

In this guide, we will:

• Explore how brand licensing works

• Its key benefits for both licensors and licensees

• Winning real-life examples of brand licensing

Understanding Brand Licensing

Brand licensing is a process where the brand owner (licensor) grants another party (the licensee) the right to use its intellectual property (IP), such as trademarks, logos, slogans, or characters, for specific products or services.

In exchange, the brand owner typically receives royalties or a percentage of sales.

What’s in It for Both Parties?

The licensee benefits by leveraging the brand’s reputation and recognition to increase customer appeal and sales.

The licensor, on the other hand, expands their brand reach and monetizes existing assets.

Key Benefits of Brand Licensing

Brand licensing offers a strategic way for companies to grow their reach, diversify their offerings, and strengthen consumer relationships, all while generating additional revenue.

Here’s how it creates value for both licensors and licensees:

1. Market Expansion

Licensing gives brands an efficient path to enter new markets, geographically or demographically, without the need to build out operations from scratch.

For instance, a globally recognized brand can license its intellectual property (IP) to a local partner in a different region, gaining access to an existing customer base with minimal risk.

2. Boosted Brand Visibility and Loyalty

When products carry a recognizable brand, they reinforce that brand’s identity across new categories and platforms.

This increased presence helps deepen customer loyalty and keeps the brand top-of-mind with a wider audience.

3. New Revenue Streams

For brand owners, licensing is a great way to monetize existing IP.

Royalties from licensed products offer a steady source of income, fueling long-term growth without requiring direct investment in manufacturing or distribution.

4. Safeguarding Brand Integrity

Licensing agreements along with product approval technology include detailed protections to ensure brand use meets quality and branding standards, protecting reputation while enabling controlled growth.

5. Mutual Value for Both Parties

Licensing is mutually beneficial.

Licensors gain revenue and extended brand reach, while licensees benefit from the built-in credibility, awareness, and market advantage that come with using an established brand.

7 Successful Brand Licensing Examples

Curious what a winning brand licensing partnership looks like? These examples prove how powerful the right partnership can be, including some standout examples from the 2025 Licensing International Excellence Awards.

1. Capital One and A League of Their Own

Capital One’s “No Crying in Baseball” campaign drew inspiration from Sony Pictures Entertainment’s film A League of Their Own.

Starring Jennifer Garner as the Rockford Peaches coach, the ad humorously addressed travel rewards, reinforcing Capital One Venture card benefits.

The campaign ran across TV, digital, and multimedia channels throughout the 2024 baseball season.

2. Sainsbury’s Big Christmas and BFG Campaign

Sainsbury’s collaborated with Born Licensing to create a unique Christmas campaign featuring a newly animated version of the Big Friendly Giant (BFG).

The original narrative captured the BFG’s curiosity for food, leveraging nostalgia and emotional connections.

The ad received critical acclaim, becoming Sainsbury’s best-measured ad in history with a 5.9-star rating from System1’s ‘Test Your Ad’ platform.

3. The NBA and 2K Sports

The National Basketball Association (NBA) leverages licensing agreements to market team logos and player images, transforming jerseys and video games into powerful tools that boost fan engagement and generate revenue.

For instance, NBA players are compensated when their likenesses appear in NBA video games. These payments come in the form of licensing fees, which are directed to the NBA Players Association.

4. McDonald’s and Other Big Brands

McDonald’s began including branded toys in its Happy Meals with its first collaboration, Star Trek in 1979, often timed with major movie releases.

Since then, it has become a go-to promotional platform for reaching new audiences, partnering with brands like Disney, SEGA, Warner Bros., Nintendo, The Pokémon Company, Mattel, and Nickelodeon.

5. Mattel and the Barbie Movie

From makeup lines and clothing collections to even films, Mattel expands the Barbie brand through licensing deals that allow other companies to use Barbie’s image and trademarks.

These partnerships, like the one behind the recent Barbie film, helped Barbie reach new audiences, boost visibility, and drive revenue.

6. Marvel and Funko

Marvel brings its characters to life beyond comics and films by licensing them for toys, games, and apparel through partnerships with brands like Funko.

These licensing deals help Marvel deepen fan engagement and generate additional revenue from its iconic intellectual property.

7. LEGO and Other Top Franchises

LEGO excels at brand licensing by working with top franchises like Harry Potter, Star Wars, and Disney.

Through licensing agreements, LEGO creates themed building sets that bring these iconic worlds to life while expanding its product appeal.

How To License Your Brand the Right Way

A smart brand licensing strategy does more than protect your assets, it positions your brand for long-term growth.

Done right, every licensing deal becomes a powerful extension of your brand.

1. Secure Your Intellectual Property

Before you think about licensing, make sure your brand assets are legally protected.

Consult an IP attorney to register and protect your trademarks, logos, and other proprietary assets. This will help prevent unauthorized use or exploitation.

Once your intellectual property is fully protected, you can explore licensing opportunities with confidence.

2. Evaluate Potential Partners Strategically

Licensing your brand goes beyond simply allowing others to use your logo, trademarks, characters, or slogans.

It’s about forming partnerships that enhance brand equity and drive revenue.

Start by defining a clear licensing strategy with both qualitative and quantitative criteria. Then, as you assess potential licensees, consider:

• Is there market demand? If customers regularly request a product you don’t offer, licensing can fill that gap while ensuring brand control.

• Is the partnership a good fit? Extensions should feel natural. A sports team licensing its logo for apparel makes sense. A music artist partnering with a headphone brand? Smart and on-brand.

• Can the licensee scale and maintain quality? Choose partners with the resources to meet production, distribution, and brand standards at scale.

3. Develop a Legally Sound Licensing Agreement

A strong licensing agreement is essential to any successful brand partnership.

This legally binding contract should clearly outline:

• How your brand assets can be used, including logos, trademarks, or characters

• The scope and duration of the agreement, including any geographical restrictions on where the licensee is permitted to market the brand

• Compensation terms, such as royalties, upfront fees, or minimum guarantees, and how these will be paid

• How the licensee will promote the brand to ensure alignment with your overarching brand strategy

• Quality control standards to ensure the licensed products or services align with your brand’s reputation

• Termination conditions to ensure both parties have a defined exit strategy if objectives aren’t being met

Typically, the licensee pays the brand owner royalties, a percentage of sales or a fixed fee in exchange for the right to use the brand.

Consult a legal expert who specializes in intellectual property and has experience in your industry, whether that’s music, technology, or entertainment.

A lawyer familiar with brand licensing can help you draft a tailored agreement that protects your rights, minimizes risk, and sets both parties up for a successful partnership.

Support Your End-to-End Licensing Process With FADEL

FADEL’s software is built to support the full lifecycle of licensing management, from contract to compliance.

Its Licensing Management solutions, including LicenSee and IPM Suite, can help brands and govern deal terms such as usage rights, scope, duration, and compensation.

The platform automates royalty calculations and monitors sales activity to ensure they align with contract terms, reducing the risk of revenue leakage or rights violations.

In tandem, FADEL’s Product Approval software empowers licensors to enforce brand guidelines and maintain quality control across licensed products, safeguarding both reputation and consistency.

Our other services include:

• Brand Vision is a brand protection tool that promotes licensing compliance by offering full visibility into rights, talent agreements, and usage conditions. It helps protect brand integrity while streamlining workflows across marketing and product development teams.

• PictureDesk is a media asset management system focused on image licensing and rights control. It manages visual content usage across departments, ensuring all image deployments are consistent, compliant, and in line with brand standards.

Across industries, brands rely on FADEL to protect their IP, enforce compliance, and unlock greater licensing value.