Hobby manufacturers are facing an increasingly complicated legal hurdle in the production of new kits: licensing. A license is an agreement between a company owning a property and one that wants to create a product with the name, images or distinguishing marks of the property on it. For example, Playing Mantis, which produces "Star Trek" kits in its Polar Lights line, obtained a license to do so from Paramount (owned by Viacom). Companies that produce NASCAR models must be licensed by multiple entities, including NASCAR, the car owner, and every sponsor with a decal on the vehicle. The licensor wants to make sure its brand is displayed accurately and on the best product possible. Some want nothing more; others see licensing as a legitimate and lucrative revenue stream. In most cases, manufacturers have to pay for each license. Common licensing agreements stipulate the licensor gets a percentage of each kit sold and a guaranteed fee. Any fixed-term royalty agreements must be renewed as long as the kit is sold. According to industry sources, licensing costs vary widely. Ed Sexton, Revell-Monogram's senior manager of product development, says, "The cost of a license depends on the royalty percentage rate that is calculated on the wholesale price of the product." That rate can be as low as 1% and as high as 20%.
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