Licensing

   A legally binding agreement between two parties, a designer (licensor) and a manufacturer (licensee), a license "loans" the name of the designer for the purpose of using that name on the label to manufacture and sell merchandise. The designer receives monetary compensation usually in the form of royalties and guarantees from the manufacturer. Royalties can range anywhere from 3 to 10 percent, depending on the designer, celebrity, or commodity being licensed. Clothing designers have been licensing their names to perfume as early as the mid-nineteenth century, as well to products such as cosmetics, eyewear, ties, shoes, accessories, jewelry, home products, and even food. Celebrity licensing deals, which began in the mid-1900s, are one of the fastest-growing segments in the fashion industry. Celebrities include sports icons, musicians, actors, and even cartoon and movie characters (such as Mickey Mouse and Star Wars). License Magazine estimated that worldwide retail sales for licensed merchandise in the fashion category reached a total of $37.3 billion in 2004. Of that, according to the International Licensing Industry Merchandisers' Association (LIMA), celebrity merchandise retail sales totaled $3.16 billion. The licensing trend continues to grow, becoming a major factor for market share within the fashion industry.