For Escape Room owners, growing a business is a big challenge.
But once you’ve found some success, why not leverage your hard work to make more money?
This is where licensing comes in. Keep reading to find out how licensing can help you increase your popularity and your income!
What Is Licensing?
“Licensing” is, essentially, you are giving someone else permission to use something that you own. That permission is known as a “license.”
Contrast this with an “assignment,” which is you handing off your ownership of something.
Because of this difference, a license is beneficial for three reasons:
- You retain ownership of your property
- The license agreement can have limitations (so you retain the right to keep using your property)
- A license can be revoked for certain reasons, which allows you to stop them from using your property if (for example) they breach the agreement
A license allows you to accomplish two goals at the same time: you can make money and spread your brand, while still retaining ownership and control of your intellectual property.
This, you can imagine, is a good thing!
What Kinds of Things Can An Escape Room Business License?
When you start an Escape Room business, you’re going to be developing two important pieces of intellectual property:
- Your brand name (which is a “trademark” – check out this post for more info)
- Your escape room puzzles, stories, and other game content (these are protected by copyright)
Both of these things can be licensed to other parties, for different reasons.
Licensing Your Brand Name/Trademark
When you start a brand new business, your name doesn’t really have any strength or goodwill in the minds of customers.
As you get more successful and start to earn your players’ trust and loyalty, that goodwill is all bundled up in your brand name. This is why trademark rights are so important.
They stop other businesses from using your brand name (or one that’s really similar) in order to “confuse” potential customers about who is providing them that service.
That’s why it’s so important to both have a very distinctive brand name, and to carefully control how it’s being used.
However, in addition to just using the brand name for your own business, you can grant a license to other businesses to use your name, too.
That way, they can take advantage of the goodwill that you’ve built up for your business and more easily hit the ground running.
Beware: If you do license your brand name out to someone else, you want to make sure that you retain some quality control. Otherwise, you could risk losing your exclusive rights to use that brand name under trademark law.
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Licensing Your Copyrighted Work
Another big facet of licensing for Escape Rooms is selling licenses to use your copyrighted intellectual property, which could be your puzzles, your stories and themes, and other creative parts of your Escape Room experience.
This allows other Escape Room businesses to quickly get their rooms up and running by using pre-made and pre-tested scenarios.
For those who may love the business side of escape rooms, but aren’t quite as good with the puzzle aspects, this can be a huge help!
You can check out the Game Designer section of EscapeFront’s vendor directory for some vendors who are currently offering pre-made escape room scenarios for license.
What About Franchising – Is That An Option?
Franchising is another option that combines the two types of licensing I discussed above, and goes beyond.
What Is A Franchise?
You’ve definitely seen them before – check out your local McDonald’s to see a franchise in action. Generally, these restaurants are owned and operated by a local business owner, who purchases the right to run that franchise location from the main McDonald’s corporation.
The same can be done with Escape Rooms.
A “franchisee” (the single McDonald’s location, in this example) will be able to use the brand name and copyrighted material of the “franchisor” (the McDonald’s corporation). They also get to take advantage of the franchisor’s support system, deliveries of food, business methods, and other franchise-specific benefits.
The franchisor will also have a good amount of control over how the franchisee is running their franchise.
But Wait – It’s Not That Simple
Because of the large risk of abuse that can come from the unequal balance of power in a franchise relationship, there are federal and state laws that control how a franchise must be created.
This usually involves a good amount of very specific legal work up front and lots of information and risk assessment documentation before you can start franchising out your name.
Franchisees are often pouring a lot of money into starting up their location (including the money paid to the franchisor), so the government wants to be sure that they are well aware of the risks associated with the business and the potential income they can be making.
Because of this, it can be a bit expensive to get a franchise set up. However, if your brand is growing large enough, it can be well worth it.
Beware: If you’re licensing out your trademark, it is VERY easy for this to be seen as a franchise relationship. If you haven’t done all of the groundwork required by law, you could end up getting in trouble. Be sure to speak with an attorney before you license out your trademark to other escape room businesses!
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Licensing Someone Else’s IP
If you’re interested in using someone else’s intellectual property to theme your escape room, you may have to be prepared to pay.
That’s because IP holders can be extremely protective of their property. And rightly so!
Many property owners will require a minimum amount of money, paid up front, and possibly a royalty that gets paid out on a regular basis. They often require a guarantee of a minimum royalty amount, as well (called a “minimum guarantee”).
Another important thing that is usually required in all IP license agreements like this is some kind of approval of your usage. So if you were to license Winnie the Pooh, Disney is going to have to approve any way that you’re using it.
This can make things difficult if the IP holder is very picky about things.
Additionally, you want to make sure that you’ve covered the different things in the next section when signing a license agreement like this. Without the proper terms, you could severely limit your rights or end up overspending for something that’s not useful.
5 Important Things To Have In Your License Agreements
Whenever you sign a license agreement to license out your trademark or your copyrights, it’s important to have the important terms in writing. This helps each party understand the scope of the agreement, and can avoid fights down the road.
Here are the 5 things that should be in every license agreement:
- The scope of the license – it’s vital that you specifically detail exactly what is being licensed. Keeping it vague can lead to issues where the business buying the license thinks they’re entitled to more than they actually are!
- The license fees – how much are they paying for the license? Is it a single flat fee, a recurring fee, or a royalty paid on how much revenue they bring it? Be sure this is very clear in the agreement.
- The “Term” of the license – “Term,” in a license agreement, means the length of time that the license lasts. Does it go on forever, or is there a specific amount of months or years that it lasts? Will it automatically renew, or do you both need to agree to renew the license? Get this in writing or you’ll regret it.
- Termination – how do you get out of the license if things are going well? Most license agreements will have a few ways for the parties to cancel the license, such as if one of the parties breaches the agreement, if a certain number of sales aren’t made, or just if the Term runs out.
- Dispute resolution – if you end up fighting over the contract, what happens then? Usually, a license agreement will be specific about how you resolve disputes. This includes, for example, an agreement to go into mediation, arbitration, or to bring all disputes in a certain city/state’s courts. This can avoid a fight about where to fight!
With all of this in mind, you’ve got the tools to start exploring the possibilities of licensing out your Escape Room intellectual property.
But, don’t get into it lightly. Have an attorney walk you through the process and draft a rock-solid license agreement for your business before you sign something you regret!
If you’d like help with this, contact me or set up a free consultation through my website here.
Escape Room Licensing FAQ
Is there a searchable database that provides contact information for music, movies, etc.?
For music, there are searchable databases that allow you to find the publisher. This is done through the various Performance Rights Organizations, such as:
Movies, games, and other intellectual property are more difficult. You may need to track down whoever has either produced or distributed the work, then check their website for business or other contact info.
Are there any guidelines as to what I should charge to license my escape room?
The market determines what intellectual property is worth.
So really, all you can do is check out what others are licensing their comparable IP for and generally match that. If you think you’re offering more or you have a certain degree of fame or goodwill in the industry, you can probably get away with charging more.
Similarly, if you’re new to the game, you may need to charge less to compete and gain an audience.
What should I expect to pay to use others’ licenses?
As with the last answer, it depends on what the current market is like.
You’re going to get the cheapest price for “commoditized” licenses, such as those who are offering their escape games to anyone who pays for it.
Most likely, you’re going to pay a one-time or annual fee for these licenses.
If you’re looking for exclusivity or more rights than the usual escape room license is offered for, then the price is going to go up.
For licenses to big-deal intellectual property, you may have to pay an up-front fee or a minimum guaranteed royalty each year.
Any country/region-specific brand licensing anomalies I should be aware of?
Not that I know of. I’m only licensed to practice law in the US, and generally, they’re going to allow you to agree to whatever terms you want to agree to.
Other countries may be different. Consult local legal counsel for those.