Licensing in the Fashion Industry

Key Companies Behind Branded Beauty Products and the Accessories

Sectors & Markets

29 May, 2023

Table of contents

What is License and How does it work?

Licensing is an important phenomena in many industries today, especially, Fashion & Luxury. This kind of agreement gives to the licensor a big advantage of exploring new markets and brand extensions that he is not able to do on his own. For licensees, more projects and a well-known clientele is an equal win-win.

A standard licensing agreement states that the licensor will provide the licensee with intellectual property rights, such as a brand name or product creation know-how. The licensee pays the licensor an upfront fee and/or a royalty fee in exchange for the licensor's intellectual property.

Licensor:

  • Develops the product stylistic guidelines and PR strategy.
  • Defines distribution strategy and can limit the parameters in commercial policies, for example, quantity of products or certain locations.

Licensee:

  • Creates prototypes according to the licensor’s directions and manufactures the final product.
  • Formes pricing strategy and general sales conditions via various sales formats.
  • Implement full or partial control on marketing and media plans and budgets.

Eyewear and cosmetics are the most licensed product groups. Companies like EssilorLuxottica and Safilo Group are ruling the eyewear licensing business making eyewear for luxury and fashion brands. While companies like L'Oreal and Coty are winning in the cosmetic (including fragrances) segment. Licensing in the Watch industry is not as common but still the players like Fossil are producing for many big brands.

In the fashion industry, any product can be licensed, even the ready-to-wear and the acquisition of a licensor or licensee partner, and vice versa, is a common business practice. For example, the Tom Ford brand has a longstanding licensee relationship with Ermenegildo Zegna. In November 2022, Estée Lauder Companies announced the acquisition of Tom Ford and the expansion of the agreement with Zegna Group. By the way, the Tom Ford Beauty was first introduced by Estée Lauder Companies in 2006.

Licensing in Eyewear

The global eyecare and eyewear industry is valued at over €100 billion (price to consumer). There are only a few global players who manufacture and distribute sunglasses and optical frames worldwide. It's interesting to note that almost all of the companies were founded in Italy between the end of the nineteenth century and the middle of the twentieth century.

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