Participation royalties are a portion of your earned royalties that must be paid to a third party, such as a licensing agent, intellectual property owner, actor, athlete, inventor, or artist. Create a Participation Agreement in RoyaltyZone to calculate and report participation royalties. You’ll define the source agreements, applicable rights, choose a reporting rule, and enter the terms for each of your Participation Agreements. RoyaltyZone will automatically calculate participation royalty owed across all of your licensees and create a statement for each recipient.
NOTE: If you are new to RoyaltyZone, create your "Licensed Out" license agreements before your Participation Agreements
1. Click "Create New… Agreement" and select "Licensee" role
2. Select "Participation Agreement" type
3. Enter the company name of the third party you intend to pay
If found, select the appropriate company name to proceed. Otherwise, click "Add New Licensor" and complete the company profile
4. Enter the Participation Agreement details
The participation agreement entry flow mirrors the entry flow for licensed out license agreements. Complete the agreement description fields:
* Agreement Name and Agreement Number
* Start Date, End Date, and Royalty Start Date
* Currency (RoyaltyZone will normalize all reported sales/royalty currencies to the Participation Agreement currency)
* Late Fee, Liability Insurance Requirements, Legal Notices, and Description (all optional)
5. Select a royalty reporting rule
Select an existing royalty reporting rule or use "Create New Reporting Rule" to define a new rule for your Participation Agreements. Reporting rules define when participation royalty reports are due and what fields will be included on the participation royalty statements.
6. Select desired Source Agreements
Participation Agreements use sales and royalty data from one or more of your Licensed Out agreements to calculate royalties owed. RoyaltyZone will only include data from the "Source Agreements" selected here.
Use ALL Licensed Out Agreements – use this option if you pay participation royalties for properties across all of your licensed out agreements. Any new licensed out agreements that you publish will automatically be added to the source agreements for this agreement.
Select individual Licensed Out Agreements – use this option if you pay participation royalties to third parties only for specific agreements, such as a licensing agent commission.
7. Select all Properties for which the 3rd party is entitled to receive a participation royalty
Most participation royalty agreements are for one or more specified licensed property. Only sales and royalties for the selected properties will appear on the participation royalty report.
8. Verify the Categories, Territories, and Distribution Methods for which the 3rd party is entitled to receive a participation royalty
RoyaltyZone automatically imports all Categories, Territories, and Distribution Methods used for the selected properties on your selected source agreements. Remove any unwanted items. For example, if the third party will not receive participation royalties for items sold in certain Territory, remove that Territory from the Participation Agreement.
TIP: Once you publish a Participation Agreement, RoyaltyZone will help you keep your rights in Sync between Source Agreements and Participation Agreements. Also see the tutorial "How do I keep Participation Agreement and Source Agreement rights in sync?"
9. Enter the Participation Royalty Rate(s)
You can choose either Percent of Royalty Due (most common) or Percent of Net Sales. Use Association to define how and when the royalty rate will be applied.
10. If applicable, enter the Participation Advance(s), Guarantee(s), and Fee(s)
Step 8: Do you need to pay (and recoup) and Advance to the third party? If so, enter those terms here. Skip if there is no advance.
Step 9: Do you a have a minimum participation royalty guarantee (and payment schedule to track)? If so, enter those terms here. Skip if there is no guarantee.
Step 10: Do you need to pay any fees (administration fees, renewal fees, reimbursements, promotions fees. etc.) to the third party? If so, enter those terms here. Skip if there are no fees.
11. Review and Publish the Participation Agreement
Review all entered data and terms. Click "Publish" when you are ready to start creating royalty reports for the Participation Agreement. Post-publish changes can be made via Amendment.
12. Participation Agreements can be found on your "Licensed In" Agreements Tab
1. Click "Agreements"
2. Click "View Licensed In"
