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 Big Toy Companies, Or Smaller Ones?

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Roger Brown

Roger Brown

Location : South Carolina

Big Toy Companies, Or Smaller Ones? Empty
PostSubject: Big Toy Companies, Or Smaller Ones?   Big Toy Companies, Or Smaller Ones? EmptyWed May 06, 2009 1:52 am

There are advantages and disadvantages to contacting big or small toy companies when looking for a licensing deal.

Big toy companies (Mattel, Hasbro, etc) want you to go through a Toy Broker to submit any product for review. This puts you at the mercy of a Toy Broker who has a win-win situation. They get paid no matter the outcome. You pay them to review your product idea. If they don't think it fits their client base they return it to you. If you still want to pursue another large company you have to go to another Toy Broker and pay them for the same type review. Fees range from $175 to $350 per idea for review for most Toy Brokers. So, if you have 10 toy ideas you are looking at a sizeable fee. If they think it has potential and is in a proper presentation format they will send you a contract stating what the revenue royalty split between you and them will be if they get you a licensing agreement. This can range from 50/50 to 25/75.
If they think your product idea needs work or further design development most offer that service for another fee. Remember, you still have not gotten your product idea in front of a company yet. Now, lets say you finally have a proper presentation and they show it to the big company. You get a Yes or a No. A No means you are back to square one. A Yes means you get a licensing contract and hopefully an advance split with the Toy Broker. Don't spend your fortune just yet because even with the contract you are normally a year away from it hitting the stores and things can happen. The company can decide to drop your product for a myrid of reasons. I was one month away from production and had my product dropped. I got to keep the advance and had the rights to my idea returned to me so I can pursue it elsewhere. No real explanation why other than they pulled funding for the line.
Advantages- If you get a contract with a major toy company and it makes it to the stores you have the potential for great royalties.

Dealing with small/medium sized companies normally gives you the ability to speak directly to the Yes/No person in the company. There is no middle person. If they like the product idea you get a licensing deal with no advance. The royalty percenatge is the same as the large company, but the volume is smaller unless your product happens to be the one that puts them on the map. Most medium sized toy companies want to be a Mattel so they are more open to looking at ideas to help them reach that goal. For example if you went to Mattel and told them your product would sell 500,000 units a year they would probably pass on it. If you told that to a medium sized company you might be their flagship product. A Mattel sized company needs high volume products that can sustain their higher overhead.
Advantage- Medium sized companies can have a longer run on a product so what you don't get in volume up front you may make up for over the life of the product.

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