Should You License Your Show Name?

It's a shorter but tricky route overseas

By Rayna Skolnik

To the list of methods show managers can use to expand internationally -- produce a show on your own, produce a show with a partner, or organize a pavilion -- add one more option: license your show name to another organizer. It can be a good choice for small show management companies because it involves less money and staff time than the other options. It can also be low risk, but only if you choose your licensee carefully and structure an agreement that's comprehensive enough to protect both your investment and your reputation.

Licensing is much like franchising. A franchiser gives an individual or a group the right to use the franchiser's name to market goods and services. In licensing, one organizer gives another the right to produce a show under the name of an established event.

But no franchiser, and no show organizer, would be reckless enough to say, "Here's my name. Run the business -- or the event -- any way you please." Rules and regulations must be followed to retain either the franchise or the license.

Only a few show management companies have explored this option. But one that has had real success with it is A/E/C SYSTEMS International Inc., Exton, PA, which currently licenses events in Malaysia, Hong Kong, Singapore, Mexico, Italy and Japan. Its original licensee, Delphi Inc. in Japan, still holds the license after a decade.

Licensing objectives
Licensing produces additional revenue for A/E/C SYSTEMS and creates new opportunities for its exhibitors. But the licensed events also enhance the international reputation of A/E/C's three U.S. shows, thereby attracting more exhibitors and attendees from other countries. That domestic growth was, in fact, one of the company's objectives when it began licensing.

There were several indications of the potential for shows under the A/E/C name in other countries, says George Borkovich, a principal of the company. "You can license your name only if there is international brand awareness," he says. "People from more than 75 nations attend our U.S. shows, and they tell us we have a significant brand name. Also, we know that the technology showcased at our events is primarily U.S. technology and is exportable. If you have strong international attendance, and your exhibitors are selling to overseas markets, the potential is there." By licensing the show name to other organizers, "we can service our existing exhibitors in overseas events without establishing a marketing and management infrastructure in those countries. This allows us to remain a small company."

Another goal was to attract international exhibitors directly to the A/E/C shows in the United States, rather than have them try another show first. Specifically, says Borkovich, "We wanted to circumvent COMDEX. It's the big horizontal computer show, and A/E/C is the big vertical show. We're the dominant show in computer-aided design and construction."

A/E/C has apparently been successful. "We picked up a major European client whose first show in the United States was ours," says Borkovich. At its first U.S. show, the company booked 500 square feet of exhibit space. It is now going into its fifth show with 2,400 square feet. Without the relationship established at the European show, the company might have started out at a larger and more visible -- but possibly less appropriate -- event.

Licensing also boosts attendees' awareness of the U.S.-based shows. "Our attendance has shot up from every place where we have a license," says Borkovich. For example, Japanese attendance at the U.S. events went from a few dozen to about 200 each year. There's even a "halo effect." One year it was announced that there would be a show in Korea. Even though plans didn't work out and the show never took place, Korean attendance at the U.S. shows increased that year.

Although A/E/C SYSTEMS looks at market potential when deciding to license, the former Object World Corp., now the Object Management Group, chose to license because of market limitations. The company was producing the Object World software shows in the United States. A similar show, the South Pacific Object Oriented Conference (SPOOC), existed in Australia. The worldwide market targeted by those shows was worth only $100 million at the time, and Australia was just a small portion of that, says William Hoffman, Vice President of Business Development for the Framingham, MA-based Object Management Group and President of the predecessor company. Consequently, it didn't pay for Object World to enter Australia with its own event. "We suggested that SPOOC become part of the Object World series," says Hoffman. "Because it was a small market and we were a small company, licensing made sense."

But licensing can also be an option for a large company if market conditions don't warrant a substantial investment. For example, The Interface Group (TIG), Needham, MA, considered that route prior to its acquisition by SOFTBANK COMDEX Inc. "When I wrote the business plan for the COMDEX show to go international, we were looking to do traditional licensing," recalls Francis Friedman, who was at the time Vice President of Corporate Development for TIG. "We started negotiations in Brazil, Japan and Singapore," says Friedman, now President of Time & Place Strategies Inc., New York City.

New management chose a different route, however, when it became apparent that the market was strengthening. "The increase in market penetration of computers and the expansion of exhibiting companies' global sales opportunities made joint ventures more viable," Friedman explains.

SOFTBANK COMDEX has additional reasons for choosing not to license. Bill Sell, CEM, Show Director for COMDEX, says, "We want to have more control for global consistency. Licensing is the quickest way to go overseas, but it's a gray area. How far does it go? Are you just giving them the name? It's risky." There's no question that there is risk involved in licensing. But obviously it is doable, if you proceed with caution.

Identifying a licensee
When you license, you entrust your show's name, and yours, to another organizer -- no small matter. You want an organizer that understands your industry, has solid show-producing experience, and one with whom you'll have good rapport. The best way to find candidates is to tap the usual sources: industry associations, your exhibitors and attendees, and your own network.

Associations are an important source for The World Trade Center (WTC) Boston, which licenses a themed consumer event, "The World of Dinosaurs," in Puerto Rico, Taiwan and Korea, and is now developing "The World of Baseball" for licensing. "Many leads for the local organizers come from the World Trade Association meetings," says Lisa Judd, Director of International Business. Member facilities either organize shows themselves, or they know of suitable organizers. Judd also makes numerous contacts through her membership in IAEM, where she is on the International Committee.

Attendees and exhibitors helped lead A/E/C's Borkovich to overseas organizers. "We scour our attendee list to see who's coming from what societies. Then we ask them who's producing shows that serve those fields. We also ask exhibitors which show organizers they've had experience with."

If your company is known to license its name, you may be approached by overseas organizers. But even if you haven't yet taken the plunge, you may be approached unexpectedly. That happened at Expocon Management Associates Inc., says Peter Nathan, CEM, who was formerly Expocon's Vice President for New Business Development and Planning. Expocon produced a public show, "The Time of Your Life," for senior adults. UK-based organizer Andry Montgomery was interested in doing a similar show. "Because it was a public show, and strictly local, we couldn't contribute to it," says Nathan, now President of PWN Exhibicon International L.L.C., Westport, CT. "You don't sell U.S. companies to exhibit in a local consumer show overseas. But we could let them use the name."

Because Nathan and the Andry Montgomery executives were close professionally, Expocon knew of the licensee's reputation. Without such knowledge, Nathan warns, "You must do a thorough background check if you are at all interested in your reputation."

Rights and responsibilities
Part of the appeal of licensing is that the licenser need not be heavily involved in operations. But you can't be too hands-off either. There must be a clear and comprehensive contract that spells out exactly what the licenser will contribute, and what the licensee is both expected to do and prohibited from doing.

To ensure that the contract covers all contingencies and eliminates misunderstandings, it's best to work with a lawyer. Judd advises selecting a lawyer who understands international law, including tax situations and political processes that can affect the way business is done. A lawyer is also necessary to register and record trademarks internationally. In fact, with an eye to the future, A/E/C SYSTEMS has registered its trademark in 30 countries.

Typically, the licensee receives the right to use the show name and logo. The licenser also provides varying amounts of guidance to help ensure the success of the event. "We contribute our management expertise and give them the background on why we've been successful," says Borkovich. "We also take an active role in enlisting the exhibitors that are our best clients in the United States."

A/E/C also provides promotional support in the industry magazines it publishes. Under the terms of the licensing agreement, licensees receive complimentary advertising space in publications sent to the event's audience base. The international events are also mentioned in exhibitor publications and in sales materials for the U.S. events. Any leads that result are forwarded to the overseas organizer.

When the Object World name was licensed, the division of responsibilities was clear, says Hoffman. "We provided ad slicks and logos and explained the marketing position. We explained how we did our direct mail selects, helped develop the conference program and provided exhibitor leads. The licensee found the venue, funded the event, put it all together and optimized it to their culture. It would have been difficult for us to do that from here." The contract covered a two-year period, with automatic renewal if certain performance standards were met.

Earlier this year, however, Object World sold its shows to SOFTBANK COMDEX. "We inherited the licensing agreement," says Executive Vice President Milton H. Herbert Jr., noting that it still has nearly two years to run, and there's no way to know now if it will be renewed.

WTC Boston's Judd also handled licensing in her previous position, as Vice President of Licensing for Boston-based IDG World Expo Corp. At IDG, which at one time had 18 licensed MacWorld shows, "licensees got the name, the look and feel, and some conference and sales support," she says. "The contracts there were much briefer, and no lawyer was involved." However, IDG's in-country partners often were publishing companies that were licensed to produce IDG publications and also had experience producing shows.

The contracts are far more detailed at WTC, says Judd. "We're involved in the creative aspects here. We create a look and insist that licensees use it. We try to strongly recommend that they spend a certain amount on advertising and public relations, because what we recommend works. Our marketing plan produces enormous success."

Risks and restrictions
Because the licenser's name is at risk, contracts must contain safeguards. "We put quality standards into the licensing agreement," says Borkovich. "If we don't like the way the partner is managing the show -- if we think it's harming our name -- we have some out clauses."

Hoffman protected the name in another way. As licenser, he retained ownership of the trademark, and the contract specified the ways the licensee could use it.There are competitive concerns, as well. "We want licensees to be exclusive with us, so they must sign three- or five-year non-compete clauses," says Judd. "They also sign nondisclosure clauses. We did the same thing at IDG."

Territorial limits must also be clear. "Agreements are exclusive within a market region, and that must be defined in the license," says Borkovich. Registering a trademark, as mentioned above, is another way to prevent incursions by unauthorized organizers.

Financial arrangements
A licensee generally pays the licenser both an up-front fee, for the right to use the name, and royalties. The royalty is usually a percentage of revenue, plus another percentage of revenue over a specified amount.

When structuring the royalty, it's important to include all relevant sources of revenue. Booth sales and attendee fees are the obvious ones. But don't overlook the other opportunities, such as sponsorships or the conference program. "The conference is a major part of the revenue for Object World," says Hoffman. Consequently, it figured prominently in the royalty formula.

If someone else is handling the books, how do you know you're getting all you're entitled to? This is when you'll be glad you did background checks and selected a competent, trustworthy licensee. But it's also wise to have contractual protections. "We had the right to audit the accounting statements," says Hoffman. "If I suspected that there was a problem, and an audit revealed a discrepancy greater than a specified percentage, the other party would have to pay what they owed, plus the discrepancy, plus a penalty." Hoffman never had to resort to an audit -- the possible penalty helped to keep the other party honest.

Because WTC Boston licenses consumer events, it receives daily attendance reports. Also, their people are on site for part of the 30-day run of each event, to get a feel for the attendance. For "The World of Baseball," Judd hopes to have a turnstile with a clicker, an extremely accurate way to count attendees. But she acknowledges that there are instances where that could be offensive: "It depends on both the show and the country."

Bear in mind, however, that even when you do get everything you contracted for, licensing is not likely to make you wealthy. The time and money invested are less than if you organized your own show, the financial risks are therefore lower, and the return is proportional. For Borkovich, it's like the difference between a certificate of deposit and an aggressive, high-growth stock.

Monitoring performance
To protect your investment, and your name, you need to discover whether the licensed event is an asset or a liability. To do that, you or your agent will need to be on site for some, if not all, of the event. Judd mentions having people on site, although for only part of the time because of the length of the event. When Hoffman licensed Object World, either he or someone from his company attended. Even Nathan, who licensed to an organizer he knew well, says, "I absolutely went to their show to see what they did and what they should do differently."

But you can't be everywhere, and you won't have the on-site staff you'd have if it were your own show. So you'll need to rely more heavily on your usual sources of information -- exhibitors and attendees. "We also listen to the speakers and consultants who attend and report back to us," says Borkovich.

If you don't like what you see or hear, and if the licensee can't or won't correct it, you can either revoke the license or not renew it. Here again, it's important to have procedures clearly spelled out in the contract.

To begin with, the license should be for a short enough time period -- one to three years, depending on the show cycle -- that no serious damage can be done. Also, there could be a clause giving you the option to revoke a license before it expires. But the conditions for doing so would have to be clear enough for you to be on firm ground.

A/E/C has in fact revoked some licenses, but only once because of an organizer's unsatisfactory performance. In the other instances, market conditions had changed.

Although licensing requires far less of a show manager's time than producing a show either alone or with a partner, it's still work. "These deals take a long time," says Borkovich. "The courtship period is a minimum of four months, but more often between nine and 12 months."

As for the events themselves, WTC Boston's Judd advises show managers to plan on being involved for at least three years, or three show cycles, before passing judgment on an event's viability. "Overseas isn't quick and dirty," she cautions. "It's long-term."

Side Bar: Understanding licensing