Royalty Structures
Royaltystructuresbuiltforclarity.
Three structures — royalty, profit share, and minimum guarantee — with transparent reporting and defined settlement cadence built into every program from day one.
Structure Options
Three structures.
One right fit for your program.
We'll help you determine the right structure based on your IP, program scope, and partner requirements. Most programs use one primary structure — some combine elements.
Royalty
Percentage of net sales
The licensor receives a percentage of net sales on every unit sold. Rate is agreed upfront and applied consistently across the program.
- Agreed rate applied to net sales
- Settled on defined cadence (monthly, quarterly)
- Transparent per-SKU reporting
- Scales with program volume
Best for
Established IP with predictable sell-through
Profit Share
Split on net program profit
Revenue minus agreed costs — production, fulfillment, platform fees — split between licensor and licensee at a defined ratio.
- Defined cost structure agreed upfront
- Split applied to net program profit
- Full cost transparency in reporting
- Aligns incentives across both parties
Best for
New programs where volume is uncertain
Minimum Guarantee
Floor + royalty above threshold
A guaranteed minimum payment to the licensor regardless of sales performance, with royalties applied once the MG is recouped.
- MG paid upfront or on schedule
- Royalty applies after MG recoupment
- Protects licensor downside
- Structured into the licensing agreement
Best for
High-value IP or exclusive category deals
Side-by-Side
How the structures compare.
| Royalty | Profit Share | Min. Guarantee | |
|---|---|---|---|
| Licensor receives payment when | Units sell | Program generates profit | Agreement signed (floor) + units sell |
| Licensor downside protection | None — zero sales = zero payment | None — zero profit = zero payment | Yes — MG paid regardless of sales |
| Licensee risk | Lower — only pays on sales | Lower — only pays on profit | Higher — committed to MG upfront |
| Complexity | Low | Medium — requires cost agreement | Medium — requires recoupment tracking |
| Best for | Established IP, predictable volume | New programs, uncertain volume | High-value IP, exclusive deals |
Specific rates, splits, and minimums are negotiated per program. This comparison is illustrative — actual terms depend on IP, category, territory, and partner requirements.
Reporting & Settlement
Transparent reporting.
On-time settlement. Every cycle.
Royalty disputes and late settlements kill licensing relationships. We built the reporting infrastructure to prevent both — one system, defined cadence, clean records.
One Reporting System
All partners, all SKUs, all channels — one system. No spreadsheet reconciliation, no chasing numbers.
Defined Settlement Cadence
Monthly or quarterly settlement agreed at program setup. Payments and reports arrive on schedule, every cycle.
Per-SKU Transparency
Sales, returns, and royalty calculations broken down by SKU. Every line item is traceable.
Multi-Channel Reporting
DTC, wholesale, and retail channels consolidated into a single report. No channel is a black box.
Audit-Ready Records
Documentation structured for licensor audits. Clean records from day one.
Partner Access
Reporting access configured per partner. Licensors see what they need — nothing more, nothing less.
How We Decide
Structure is determined by your program — not a template.
We start with your IP, your partner requirements, and your program goals. The right structure follows from those — not the other way around.
On your licensing call, we'll walk through the options, explain the tradeoffs, and recommend a structure that works for both sides of the deal.
Book a Licensing CallWhat factors determine the royalty rate?
IP strength, category, territory, exclusivity, and program volume all factor in. Rates are negotiated per program.
Can structures be combined?
Yes. Some programs use a minimum guarantee with a royalty above the MG threshold. We'll structure what makes sense.
How often are settlements processed?
Monthly or quarterly — agreed at program setup. The cadence is locked in and doesn't change mid-program.
What if sales underperform?
Depends on the structure. Royalty and profit share programs pay on performance. MG programs guarantee a floor regardless.
Get Started
Let's structure your program the right way.
Tell us about your IP and program goals. We'll recommend a structure and walk through the reporting setup on your call.