Tracking & Collecting Royalties 2

[SAITAETGrad]

What mechanisms can one use when setting up a per unit royalty arrangement with a private small business? Obviously you need to have trust with those you are doing business with. But, are you totally at their mercy? What can you do to ensure your interests are protected?

Example: Engineering firm develops a useful and unique widget. Manufacturing company intends to make and market the widget and pay engineering firm on per unit basis.

 

[MacGyverS2000]

Simple... your agreement includes a stipulation that you can have an independent audit of their books. Could be as often as every three months to once every 5 years... all depends upon how many widgets you expect to be manufactured in a specific time frame, how much royalty per widget, etc.

Dan - Owner

http://www.Hi-TecDesigns.com

 

[zdas04]

You can add a twist to that. My license agreement says that if I audit and find that they have under counted the number of widgets then they pay double royalties per widget undercounted. It seems to provide a real disincentive to undercount.

David Simpson, PE
MuleShoe Engineering

"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.
The plural of anecdote is not "data"

 

[TheTick]

Get royalties based on what they produce, not on what they "sell".