A Guarantee is the minimum Royalty Payment that a Licensee is contractually obligated to pay a Licensor over the term of the agreement. Guarantees may be paid one time, quarterly, semi-annually or annually (custom payment schedules can be created), are nonrefundable and can be credited against future Earned Royalties in the form of an Advance.
RoyaltyZone provides an easy way to enter, monitor, and enforce advances and guarantees. In this tutorial, we will show you how to enter multiple Advances or Guarantees with unique effective periods (non cross-collateralized).
We’ll create three unique advances: $10,000 due at signing for first contract year, $20,000 for the second contract year, and $20,000 for the final year of the contract.
1. Click "New Guarantee" on "Step 8 – Advances / Guarantees" of the new agreement entry process
2. Enter a name for the first term (Examples = 2011 Guarantee, Year 1, etc.)
3. Use the Start Date and End Date to define the effective period of the term. Use 12/31/12 as the end date for this term.
4. Use the default setting to allow the licensee to recoup guarantee payments against earned royalties, then click "Create"
5. Select the payment due date (use the agreement start date if due on signature)
6. Enter the full amount of initial payment – in this case, $10,000
7. Enter descriptive text to help explain the payment to the licensee. The description will appear on the invoice.
8. Click "Create" to save the payment milestone, then click "Next" to proceed
9. Associate the appropriate rights, then click "Save" (Associations are used to determine when a particular term is applied to a sales transaction)
10. One down, two to go! Click "New Guarantee" to enter the 2nd term (Note: you can also use the "Clone" action to duplicate and edit the first term)
11. Enter the name and effective dates for the Year 2 advance.
12. Enter the payment milestone of $20k for the year 2 advance. Click "Create", then "Next" to proceed.
13. Associate the appropriate rights, then click "Save" (Associations are used to determine when a particular term is applied to a sales transaction)
14. Repeat steps 10 thru 13 to add the advance for the third and final contract year
15. Success! Use the Actions icons to edit, delete, or clone any the entered terms
1. Triangle: show/hide the rights associated to the term
2. Pencil/Edit: change the name, dates, or recoupabilty
3. Lego/Edit: change the associations
4. Calendar/Edit: edit, add, or remove payment milestones
5. Delete: remove the term
6. Clone: make a carbon copy of the term for easy entry of multiple terms
