When deciding to co-brand, it is essential to bear the following in mind:
Choose your co-branding partner carefully.
Get to know and gather information about your potential co-branding partner. It is essential to choose a partner that offers products or services that are complementary to those that you offer. There must be a natural link between the co-branding partners and at the end of the day, the product or service offered under the co-branding exercise must be relevant and offer value to consumers. Furthermore, the co-branding exercise must have advantages for both parties and add value to both brands.
Aside from this, the brand-holders should be compatible and have synergy to reduce the likelihood of conflicts arising and ensure a better working relationship.
It is also vital to consider the reputation of the other brand and the financial and market position and operations of the other brand-holder vis-a-vis the reputation of your brand, financial and market position and operations.
Communication and participation.
There are, of course, circumstances where one of the parties may be more involved in the co-branding exercise than the other due to its expertise, know how, etc.
However, it is important that both parties participate and are involved in one way or another and that they effectively communicate with each other. Both parties should have a say in the co-branding exercise.
Most importantly, the parties must have a carefully drafted and detailed agreement (as well as guidelines or rules) in place, which sets out the parameters of their relationship and governs the co-branding arrangement.
The co-branding agreement is, in essence, a type of co-licensing agreement and should thus include provisions relating to the use of intellectual property. It is important that the brand-holders are able to maintain their separate identities and exercise control over their respective brands to maintain the integrity thereof.
Some issues that need to be considered include the retention of the proprietary rights by each brand holder once the co-branding arrangement is terminated, ensuring that the use of the brand inures to the benefit of the respective brand holders and maintaining the distinctiveness of the brands.
Lack of quality control provisions and monitoring can result in dilution or loss of control by the brand holder and aside from this, there are other risks to consider such as liability for defective products. Thus, it is imperative that the agreement contains quality control provisions. Branding specifications setting out how (that is, in what manner and form) trade marks will be permitted to be used and the scope of such use (including territorial considerations) as well as a marketing strategy/ plan setting out how and through what mediums the product or service will be marketed and promoted and how all of this will be monitored are crucial.
Other provisions in the agreement should deal with the exclusivity, duration and termination of the co-branding arrangement. Grounds for termination should be widely construed to cater for a variety of circumstances – for example, if targets are not met, if there is an infringement or misuse of intellectual property, if one of the brand holders suffers negative publicity, etc. There should also be provisions dealing with warranties, indemnities and confidentiality. In this regard, it should be noted that entering into a co-branding arrangement may necessitate the disclosure of certain confidential or privileged information such as customer data, technology and know how, market research data, etc and the agreement should ensure that this information is not disseminated to third parties or used when the co-branding arrangement has been terminated.
The agreement should also deal with any new intellectual property, whether it be trade marks or new technology, etc, derived from the co-branding exercise.
These are, of course, just some of the considerations to bear in mind when entering into a co-branding arrangement. Co-branding is indeed a powerful tool and can certainly provide a competitive edge when properly structured. However, it is essential that brand holders are diligent and exercise due caution when entering into such arrangements.