I was approached my someone who wanted to talk to me about licensing my work.  I was a little skeptical since I’ve never been approached with an offer like that and I wouldn’t know where to begin to look up the legitimacy of a licensing company.  Would you have any tips or advice for a newby starting out that would be interested in licensing their work?  I would hate to get involved in something that would not be in my best interest or in the interest of my work.

I’ve only ever licensed my work to other small businesses, so I don’t know what kind of situation you’re in, but in general, if someone is asking to license your work in the first place, they’re probably acting in good faith.  Most folks who aren’t will just rip off your designs with poor (or in some cases, even exact) copies and won’t ask you at all.  That said, businesses act in their own best interest and are happy to take advantage of your naivete.

A standard licensing percentage for a small business is 5% of gross sales, and the contract is often exclusive to the particular product for a limited time.  For example, a company might license your design to print on notebook covers.  Your agreement would likely give them an exclusive license to print on notebook covers  for two years (which may also exclude you from doing this if you’re not careful).  Under this agreement, you would still be able print your design on t-shirts, fabric, etc., or license them to someone else who would.  No matter what, you should never sign an agreement until you’ve seen a sample of the product that’s being made with your design.  It’s the only way to make sure you’re associating your work with a quality product.

If you’re looking at a much larger licensing deal with a bigger company, I would suggest hiring a lawyer to help you negotiate a fair contract, at least the first time around.  The Renaissance Business Center here in SF can point you to some free and cheap legal advice.  You can also find a good counselor there.

I can also recommend the book Your Crafts Business by Nolo Press.  Nolo is a do-it-yourself legal publisher.  There’s a whole chapter in there on licensing and the book comes with sample agreements.  Also, this article recently posted on Crafty Chica is helpful.

I hope that any deal you make is both fair and profitable.  Good luck!