Strong brands can generate revenue on their own. Companies do this by licensing their brand to other companies. Licensing means that you give the company permission to use your brand in exchange for a payment of royalties or some other financial compensation. And that is what generates passive income.

It sounds simple, but it only works if you set things up properly.

A beautfiul stream

A well-managed brand can provide opportunities to create new revenue streams.

Using Brands To Generate New Revenue Streams

Companies of all sizes use their brands to generate passive income. Whether it’s a clothing company licensing their brand name to a sunglasses company or a beverage company licensing their name to a clothing company, it is standard practice in the business world.

Companies do this because they may not have the necessary expertise in-house to create and market new product lines. The solution is to find a partner who does have that expertise and give that company permission to use the brand.

To use your brand to generate passive income you must take a few steps to get things right. Let’s go through the main ones:

  • Register your trademark: The first step is obvious. If you are going to generate passive income with a brand you need to register your trademark. This gives you extra protection in case something goes wrong or somebody infringes upon your trademark rights. Trademark registration is a key part of brand protection and should not be ignored.
  • Protect your trademark: The second step is to properly protect your brand and trademark. This means monitoring your trademark, responding to infringers and ensuring that your trademark registration is properly maintained. Failing to do any of these steps could greatly diminish or even negate your hard earned trademark rights even if you have a trademark registration.
  • Understand how to build a brand: The third step is to develop a brand and understand what a brand does. A brand encapsulates the values of your company. As a brand owner you must be clear about what your brand symbolizes. This is important as it will help you to determine which opportunities for licensing are appropriate for your company. You only want to license to parties that share your values or that will reflect well upon your brand values.
  • Properly license your trademark: The fourth step is to properly license your trademark. This is done through a trademark licensing agreement. Trademark licensing agreements must be drafted in such a way as to protect your brand and your trademark. Failing to do so can damage your brand your reparable he. You want to make sure that the person to whom you are licensing your brand uses the brand in a way that you dictate and on products and services that meet your quality control standards.

Although not all brand owners will have the opportunity to generate passive income through their brand, it is an option that many companies have. The key is to know that this option exists, and if it is something that you are interested in doing in the life of your business, think about it now. Planning early on will make it easier to seize the opportunity when it arises. Using a brand to generate passive income is a great way to increase revenue without necessarily having to make a great investment in new equipment, supplies, or personnel.


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