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Licensing: How to verify sales?

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Thu, 12/15/2005 - 22:37
fashun_diva
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Joined: 12/31/1969

I was hoping someone could advise me on this matter…

One of our board games has been selected to be licensed in a foreign language by a European publisher. Our licensing fee will be a percentage of the net sales.

My question: How does one verify the sales made by the publisher? Does it boil down to a matter of trust as to how much the publisher declares their sales are?

Any input you can provide will be greatly appreciated!

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Fri, 12/16/2005 - 10:49
#1
VeritasGames
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Joined: 08/01/2008
Licensing: How to verify sales?

As part of the licensing agreement you should have language allowing you to audit the company's books once per year. It's at your own cost if you find no errors or find errors that are +/- 5%. More than that and the audited company pays the value of the error plus the cost of the audit.

If it's not already in your licensing agreement, then you are screwed and need to trust your licensee.

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Tue, 01/03/2006 - 21:32
#2
fashun_diva
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Joined: 12/31/1969
Licensing: How to verify sales?

Excellent advice... Thanks!

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Wed, 01/11/2006 - 22:10
#3
YojimboUK
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Joined: 12/31/1969
Licensing: How to verify sales?

Echoing Veritas -- if the prospective licensee sent you a draft contract that didn't have a clause in it allowing you to inspect their accounts, be worried. It should be standard. Also, given that they're in Europe and you're not, make sure it allows you or your nominated agents to inspect the books.

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