The Biggest Mistakes in Licensing - and How to Avoid Them

Sometimes the biggest licensing mistakes happen before the deal is even signed. In this episode of Born to License, I break down the most common pitfalls that trip up companies - and how to avoid them.

Join me at the kitchen table as I walk through a late-night conversation that turned into a full-blown breakdown of what not to do in licensing. From mismatched IP to unrealistic timelines and hidden costs, this episode is packed with hard-earned lessons every brand should hear.

We’ll cover:

• Why licensing is a partnership - not just a logo placement

• The danger of choosing IP based on fame instead of fit

• How poor planning can derail your product launch

• The financial traps that turn licensing deals into losses

If you’re thinking about licensing—or already deep in it - this episode could save you from an expensive mistake.

🎧 Listen now on your favorite podcast platform—and make sure your next licensing deal is built for success.

🎙 Born to License – Hosted by David Born

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Chapters

• 0:00 Intro: How Born to License was 'Born'
• 2:23 Kitchen Table Talk: A Flood of Licensing Questions
• 3:38 Mistake #1: Thinking Licensing Is Just a Transaction
• 4:28 Mistake #2: Choosing the Wrong IP
• 5:44 Mistake #3: Underestimating Timelines
• 6:46 Mistake #4: Ignoring the Full Financial Picture
• 8:48 Wrap-Up: The Power of Smart Licensing

Transcript

Hi, I'm David Born, and welcome back to Born to License. This season I'm sharing insights and stories from my nearly two decades in the licensing industry. What works? What doesn't how to make licensing a strategic success Licensing is a powerful tool for brands. When done right, it can expand businesses, drive sales, and create incredible partnerships. But what about when it goes wrong? It can be costly, frustrating, and in some cases, damaging to the brand itself. That's why when I launched Born to License, my mission was clear. To help businesses avoid the most common pitfalls in licensing. I had spent years working for major licensors, watching deals succeed and fail. I knew what separated the smart licensing strategies from the ones that fell apart. And I knew that too many companies entered licensing without fully understanding what they were getting into. 

 So for this episode, we're breaking it all down. The biggest mistakes businesses make in licensing, the red flags to watch out for, and what you can do to ensure that your licensing journey is a smooth one. Because in licensing, just like in business, success isn't just about what you do, it's also about what you avoid. Lets get started. It's late in the evening and I'm sitting at the kitchen table, laptop open, reviewing the latest emails. Born Licensing is thriving. We've just wrapped another licensed advertising deal. But my inbox is full of something else. Questions from businesses completely lost when it comes to licensing. My partner walks in, grabbing a drink from the fridge and leaning against the counter. That look on your face doesn't exactly scream another successful day in licensing. Is everything okay? I exhale, closing my laptop. 

 Yeah, just looking at all these emails. Another wave of companies reaching out for help with licensing. Consumer products. Companies who have no idea where to start. And they keep thinking if they don't know how to do it properly, they're probably making some big mistakes. He sits down across from me. What kind of mistakes? Well, I say, leaning back. Where do I even start? He raises an eyebrow. Alright, I'm curious. Let's say I wanted to license an IP for a new product. What are the biggest pitfalls I could run into? I smile. Are you sure you have time for this? Try me, he says. Okay, well, a lot of companies assume licensing is just like placing an order. They think they can just pay a fee, slap on a logo to their product and call it a day. But it's nothing like that. 

 So what is it like? He asks. It's a partnership. It's an ongoing relationship with the licensor. And they have to approve everything. The product design, the packaging, even the marketing. If a company thinks they can just sign a contract and move on, then they're in for a bit of a shock. So the companies that don't expect all the approvals, they end up frustrated? He asks. Exactly. And worse, if they don't follow the brand guidelines properly, the licensor can reject their product completely. I've seen businesses lose months of time and thousands of dollars because they rushed into a deal without understanding the process. He leans in. Okay, well, what about picking the wrong ip? Does that happen all the time? I say companies get starstruck by big brands. They think that if they license a famous name, they their product will automatically be a hit. 

 But just because an IP is popular doesn't mean it's the right fit. Okay, he says. So what should they be looking for? Congruence. I say the best licensing deals are when the brand and the product make sense together. A luxury fragrance brand licensing, a fast food mascot, probably not a great fit. But a Looney Tunes cereal, that makes perfect sense. So if the product and IP don't align, people just don't buy it? Yes, that's right. If the IP and product aren't a natural fit, customers won't connect with it. Just because you've licensed a big brand doesn't mean people will rush to buy it. If the connection isn't clear, if it feels forced, then it won't drive sales. And suddenly that big brand partnership becomes a massive sunk cost instead of the game changer that you expected. He laughs. 

 Okay, well, let's say I actually do pick the right ip. What's another mistake I might make? Underestimating how long it takes, I say without hesitation. I can't tell you how many companies think they can turn a licensing deal around in a few weeks. In reality, it can take six months to over a year just to get product approved into stores. Why does it take so long? He asks. Well, there's contract negotiations, design approvals, product samples, marketing approvals. And if something gets rejected at any stage, the clock resets. I've seen companies plan a big holiday launch, only to realize in September that their product won't be ready until the following year. So basically, if you're not planning well in advance, you're setting yourself up for failure? He asks. Pretty much. The best companies start planning 12 to 18 months ahead for major product launches. 

 Anything less and they're playing with fire. It can be done quicker, depending on the product, the license or other circumstances, but nine months is probably a minimum these days. Alright, he says. Last one. I'm Assuming money is another big issue. I nod. Huge. A lot of companies underestimate the cost of licensing. They assume the only expense is the royalty fee, but there's so much more. Minimum guarantees, product development costs, marketing commitments, even central marketing fund contributions. Wait, he says. Central marketing fund contributions? What are they? Well, many licensing deals require companies to contribute to a central marketing fund whether their product is a hit or not. That means paying into a pooled budget that the licensor controls, which might go towards advertising, retail promotions, or broader brand campaigns. 

 If a company underestimates how much this impacts their bottom line, or if the marketing doesn't directly benefit their specific product, they're still locked into that contribution. And for smaller brands, those fixed costs can add up fast. So it's not just about having great product, he says. It's about making sure the numbers work too. That's exactly right, I say. You have to go in with realistic projections, a clear budget, and a contingency plan. Otherwise you can get locked into a deal that's impossible to make profitable. He leans back, taking it all in. Wow. So basically, licensing is full of ways to go wrong. I laugh. It can be. But that's exactly why I'm thinking about starting a new division to help businesses avoid all of this. 

 When you have the right strategy, the right partner, and a clear plan, licensing is one of the most powerful ways it can grow a business. But if you go in blind, it can be a very expensive mistake. He nods, thinking for a moment. That actually makes a lot of sense. So this new business area, what do you think you're going to call it? I pause for a moment and then I smile. What about Born to License? So there are just some of the biggest pitfalls in licensing and how to avoid them. Licensing is an incredible tool for growth, but only if you approach it with the right strategy. Too often companies dive in thinking it's just a simple deal, only to realize they've underestimated the process, the financials, or even the IP itself. 

 Avoiding these common pitfalls is what separates a great licensing deal from an expensive mistake. Here are the key takeaways from this episode. Licensing is a partnership, not just a transaction. Too many companies assume licensing is just slapping a logo or a character on a product, but it's so much more. A licensing deal requires strategic alignment, brand approvals, ongoing oversight, and a commitment to getting it right when done well. Licensing is a true partnership, not just a one time deal. The IP has to fit the product, not just be popular just because a brand is famous or trending doesn't mean it's the right fit. The most successful licensing deals happen when the product and IP naturally complement each other, not when a company forces a logo onto something just because it's well known. 

 The right match creates authenticity, consumer trust, and stronger sales Number three Plan for Delays Licensing takes time Licensing is not a fast process. Between negotiations, approvals, product development and marketing timelines can stretch much longer than expected. Brands that underestimate this often find themselves missing retail windows or launching too late. Planning ahead and allowing for extra time is key. And finally, number four Know your numbers before you sign. This is really important. Minimum guarantees, royalties, central marketing fund contributions, Product development costs. These can add up fast if you don't fully understand them. Licensing can be incredibly profitable, but only when companies go in with a clear financial plan and know exactly what they're committing to. And that brings us to the final episode of the season. Next time we're flipping the format. 

 I've received some really great questions from listeners, everything from how to approach a licensor to whether licensing is worth it for small businesses. In the final episode, I'll be answering your biggest questions and sharing my insights on what matters most when it comes to licensing. If you have a question that you'd like me to answer, there's still time to send it in. The email is helloorntolicense.com thanks for tuning in to Born to License. Until next time, keep thinking big, because the right licensing deal could be just around the corner.