Trademark Licensing Agreement Checklist: Quality Control and Key Terms

By Casey Scott McKay · 2026-06-28

A trademark license can multiply a brand's reach or quietly destroy it, and the dividing line is control. This Rightsy checklist walks licensors and licensees through a trademark license agreement in phases, from threshold diligence and the grant clause through the quality-control regime that keeps the deal from collapsing into a naked license and abandoning the mark for everyone. It explains the statutory engine that makes licensing possible at all, Section 5 of the Lanham Act (15 U.S.C. 1055) and the "related company" definition in 15 U.S.C. 1127, and anchors every step in controlling authority, from Dawn Donut, Barcamerica, and Eva's Bridal to Mission Product Holdings v. Tempnology. Each item carries a plain-English Why note, a Trap warning where it earns its keep, and the governing rule, with worked examples built on invented brands. Phases cover scope and exclusivity, quality control in fact, the accidental-franchise wire, royalties and audit rights, goodwill and licensee estoppel, enforcement and indemnity, termination and bankruptcy wind-down, and special situations from merchandising to the metaverse. Use it to draft, negotiate, or pressure-test any trademark license before you sign.

Intellectual Property -> Trademark | Published 28 June 2026 | rightsy.io

What This Checklist Is For

A trademark license is the closest thing brand law has to a money machine. It lets an owner rent out a name it already paid to build, collect royalties from someone else's factory and sales force, and extend a brand into products, regions, and channels the owner would never reach alone. Franchising, character merchandising, co-branding, brand extensions, the quiet intercompany licenses that let a corporate group park its marks in one entity, every one of those runs on a trademark license. Done well, it is leverage. Done carelessly, it is a slow-acting poison that can dissolve the very mark you are renting out, not just for the licensee, but against the entire world.

The thing that separates the money machine from the poison is a single word: control. A trademark exists to tell consumers that goods bearing it come from, or are vouched for by, one source holding quality steady. When an owner lets someone else use the mark but stops controlling the quality of what that someone sells, the mark stops telling the truth, and the law treats it as surrendered. Lawyers call that a naked license, and it is the most avoidable catastrophe in all of trademark practice. The entire architecture of a good license agreement, every clause this checklist walks you through, exists to keep the mark pointing at a single, controlled source while the money flows.

Who should use it. Brand owners (licensors) drafting or negotiating a license; companies (licensees) being asked to sign one and wanting to know which terms matter; in-house counsel building a licensing program; founders weighing a brand-extension deal; and transactional or M&A lawyers who inherit licenses inside a larger transaction. It is written so a first-time licensor and a seasoned IP lawyer can both follow it.

What you'll need before you start. The mark's federal registration number(s), serial number(s) for any pending application, and the goods/services and international classes (the Nice classification); the current owner of record and a quick chain-of-title check; the registration's maintenance status; basic diligence on the proposed licensee; and a clear picture of the business deal, what the licensee will make or do, where, for how long, and for how much. If you have not yet secured federal rights in the mark, start with the trademark lifecycle and what federal registration actually buys you before you license anything, because you can only license rights you actually hold.

This checklist sits inside Rightsy's Trademark Licensing and Assignment Toolkit, and it is the operational companion to two narrative pieces: Trademark Overview: Obtaining Protection and Licensing Your Mark and the forthcoming deep dive on licensing agreements, quality control, and avoiding naked licensing. If the deal is really a sale rather than a rental, you want the assignment recordation checklist instead.

The One Idea That Powers Everything: "Related Company" Use

Before the first checkbox, internalize the rule that makes trademark licensing legally possible at all, because it is the rule that every other clause is built to satisfy.

At common law, a trademark was not licensable. The mark was glued to a single business; let anyone else use it and you risked deceiving the public and abandoning the mark. The Lanham Act loosened that grip with two interlocking provisions. Section 5 (15 U.S.C. § 1055) says that when a mark "is or may be used legitimately by related companies, such use shall inure to the benefit of the registrant," and "shall not affect the validity of such mark or of its registration, provided such mark is not used in such manner as to deceive the public." Section 45 (15 U.S.C. § 1127) then defines a "related company" as "any person whose use of a mark is controlled by the owner of the mark with respect to the nature and quality of the goods or services on or in connection with which the mark is used."

Read those two together and the whole doctrine snaps into focus. A licensee's use of your mark counts as your use, supports your registration, and builds your goodwill, but only if you control the nature and quality of what the licensee sells. Control is not a nice-to-have bolted onto a license. Control is the thing that converts an otherwise-infringing third party into a "related company" whose use the law credits to you. Pull out the control and the licensee is no longer a related company; its use no longer inures to you; and the same Section 1127 that defines "related company" also defines abandonment, deeming a mark abandoned when the owner's conduct "causes the mark . . . to lose its significance as a mark." Uncontrolled licensing is the textbook way to make that happen. The duty is affirmative, the courts have held since Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358 (2d Cir. 1959): a licensor must "take reasonable measures to detect and prevent misleading uses of his mark by his licensees." We unpack the abandonment side fully in Use It or Lose It: How Trademarks Are Abandoned.

Keep that engine in mind as you read. Every phase below is, at bottom, a way of proving you controlled the mark.

Phase 1 — Threshold Decisions Before You Draft

Five minutes of structuring here saves five months of litigation later. Do not open a template until these are settled.

[ ] Confirm you actually own the mark and can license it. Verify the current owner of record against the real-world owner, confirm corporate authority to license, and check for any anti-assignment or anti-sublicense covenant in an existing coexistence agreement, settlement, or upstream license. Why: You cannot rent out rights you do not hold, and a license signed by the wrong entity or in breach of an upstream restriction is worthless or breaching. Trap: Intercompany shuffles routinely leave the operating company licensing a mark that the record still shows in a founder's name or a defunct predecessor. Fix the chain of title first; see the assignment due-diligence checklist.
[ ] Confirm the mark is valid, registered (or registrable), and maintained. Pull the registration's status, basis, classes, and maintenance posture; confirm Section 8/9 filings are current. Why: A license to a mark that is descriptive-without-secondary-meaning, generic, or about to lapse for a missed renewal is a license to very little. Authority: maintenance deadlines under 15 U.S.C. §§ 1058, 1059; see Keeping Your Registration Alive. For where the mark sits on the strength spectrum, see the Abercrombie spectrum.
[ ] Pick the right legal animal: license vs. assignment vs. franchise. Decide whether the deal is a rental (license, owner keeps the mark), a sale (assignment, owner walks away, goodwill must travel; see the assignment checklist), or, by operation of law, a franchise (Phase 5). Why: Each carries different formalities and failure modes. Trap: Parties paper a "license" that is functionally a sale, or a "license" that trips every element of a franchise; courts look past the label to substance.
[ ] Vet the licensee. Diligence the licensee's financial stability, manufacturing or service capability, reputation, regulatory record, and existing IP conflicts. Why: You are about to attach your brand's reputation to their execution; a licensee who cuts corners damages goodwill you spent years building, and a licensee who goes insolvent drags your mark into a bankruptcy (Phase 9). Trap: The friendliest deals, a cousin, a longtime supplier, a fan, get the least diligence and cause the most grief.
[ ] Decide whether an ITU mark can even be licensed yet. If the mark rests on an unused intent-to-use application, recognize that licensing (permission to use) is fine and indeed can supply the use, but assigning the application before a Statement of Use is restricted by the anti-trafficking rule. Why / Authority: 15 U.S.C. § 1060(a)(1); see Intent-to-Use Applications. Trap: Do not blur a license that generates first use with a premature assignment of the application.
[ ] Map the business deal in one paragraph before lawyering it. Write, in plain English, what the licensee will make or do, under which mark(s), where, in what channels, for how long, exclusively or not, and for what money. Why: Every clause below is a translation of that paragraph; if you cannot write it, you are not ready to draft.

WHY this phase matters. Most license disasters are characterization disasters and diligence disasters, decided before a word of the agreement is drafted. Get the animal right and the counterparty vetted, and the drafting becomes execution rather than improvisation.

Phase 2 — Define the Grant: Scope, Exclusivity, Territory, Field, and Term

The grant clause is the heart of the commercial deal (quality control, Phase 3, is the heart of the legal deal). Every dimension you leave vague becomes a future fight.

[ ] Identify the licensed mark(s) with precision. List the literal mark, registration/serial number, and class for every mark licensed, including word marks, logos, and any trade dress. Attach a schedule. Why: "Our brand" is not a defined term; ambiguity about which marks are licensed invites scope disputes and accidental over-grants. Trap: A logo is often two rights at once, the trademark and a copyright in the artwork; say which you are licensing (Phase 11) and see Copyright or Trademark?.
[ ] Choose the exclusivity type, and define it. Specify non-exclusive (others may also be licensed), sole (only this licensee plus the licensor), or exclusive (only this licensee, even excluding the licensor). Why: Exclusivity drives price and, critically, standing to sue infringers (Phase 8). Trap: "Exclusive" is ambiguous unless you say whether the licensor is also excluded; spell it out. Authority: an exclusive licensee with rights amounting to ownership of the mark in its field may have standing to enforce; a bare non-exclusive licensee generally does not.
[ ] Fix the territory. Define the geographic scope (a country, a region, worldwide) and address whether the licensee may sell into or from the territory online. Why: Trademark rights are territorial, and an e-commerce licensee can blow past any map line instantly. Trap: "United States" plus an unrestricted website is a contradiction; harmonize the territory with the channel grant. For common-law geography background, see Where Your Trademark Rights End.
[ ] Define the field of use and the licensed products/services. Specify exactly which goods or services the licensee may apply the mark to, tied to the registration's classes. Why: This both shapes the rental value and keeps the licensee from straying into goods you never vetted, an unvetted extension is an uncontrolled use waiting to happen. Trap: An open-ended field ("any consumer products") hands the licensee your brand for products you would never approve and cannot realistically inspect. Narrow the field to what you can actually control.
[ ] Set the channels of trade and customer segments, if relevant. Limit to, say, mass retail, specialty boutiques, or direct-to-consumer, where the deal requires it. Why: Channel control protects brand positioning and prevents a premium brand from showing up in a dollar bin.
[ ] State the term and any renewal mechanics. Fix a definite term, and specify whether renewal is automatic, by mutual agreement, or at the licensor's option, plus any performance conditions for renewal. Why: A perpetual or auto-renewing license is hard to escape if quality slips; tie continuation to performance and compliance. Trap: Evergreen auto-renewal with no off-ramp can trap a licensor with a deteriorating licensee, exactly the situation that breeds naked-licensing exposure.
[ ] Address sublicensing expressly. State whether the licensee may sublicense at all and, if so, only with the licensor's prior written consent and on back-to-back quality-control terms. Why: Trademark licenses are presumed personal and non-sublicensable absent agreement, and uncontrolled sublicensees are naked licenses one layer down. Authority: trademark licenses are presumptively non-assignable/non-sublicensable, In re XMH Corp., 647 F.3d 690 (7th Cir. 2011). Trap: Silence on sublicensing plus a licensee who quietly farms out production equals an uncontrolled chain you never approved.
[ ] Reserve all rights not granted. Add a clause stating that the licensor retains all rights not expressly granted, including the right to use and license the mark outside the field/territory. Why: Prevents the licensee from arguing an implied license broader than the text.

Worked example. Saltmarsh & Co., a heritage outerwear brand, licenses its registered SALTMARSH word mark and anchor logo to Tidewater Mills to make and sell rain jackets and boots (Classes 25), in the United States and Canada, through specialty outdoor retailers, non-exclusively, for five years renewable on hitting sales minimums, no sublicensing without consent. Each of those bolded boundaries is a checkbox above. Now imagine the lazy version: "Tidewater may use the SALTMARSH brand on apparel and related goods." That hands Tidewater the whole house, lets it slap SALTMARSH on swim trunks and sunglasses Saltmarsh never vetted, and converts a controlled rental into the seed of an abandonment claim.

Phase 3 — Quality Control: The Clause You Cannot Fake

This is the phase the document is named for, and the one that decides whether the mark survives the deal. Read it as load-bearing. The governing trio, all explored in Use It or Lose It and the Dawn Donut quality-control discussion, is Dawn Donut (267 F.2d 358), Barcamerica International USA Trust v. Tyfield Importers, Inc., 289 F.3d 589 (9th Cir. 2002), and Eva's Bridal Ltd. v. Halanick Enterprises, Inc., 639 F.3d 788 (7th Cir. 2011).

[ ] State explicit, objective quality standards. Specify the standards the licensed goods or services must meet, materials, specifications, performance, service protocols, presentation, by reference to a written standards manual or brand guidelines attached as an exhibit. Why: Eva's Bridal abandoned a mark precisely because the licensor "had no standards" and exercised "no control." Standards are the floor. Trap: "Consistent with licensor's high standards" is not a standard; it is a wish. Make it measurable.
[ ] Remember the standard is consistency, not excellence. The mark must guarantee a consistent, controlled level of quality, whatever level the brand occupies; budget brands license too. Why: Courts do not police whether goods are good, only whether the source is controlled so consumers get what the mark trained them to expect. Authority: Restatement (Third) of Unfair Competition § 33 (1995).
[ ] Reserve the right to inspect, sample, and audit. Grant the licensor the right to inspect facilities, pull samples, observe service delivery, and audit compliance on reasonable notice (and, for franchises and food/health goods, on no notice). Why: The contractual right is the first half of control; Barcamerica says a bare right is not enough, but you cannot exercise a right you never reserved. Trap: Reserving inspection rights and never using them is the Barcamerica fact pattern itself, see Phase 4.
[ ] Require pre-production sample approval. Require the licensee to submit pre-production samples (and, for services, training and launch plans) for written approval before first sale, and after any material change. Why: Catching a quality problem before goods hit shelves protects the brand and creates a dated approval record. Trap: "Deemed approved if licensor does not object within X days" clauses are common but quietly erode control; if you accept one, calendar the deadlines and actually review.
[ ] Require approval of marketing, packaging, labeling, and mark usage. Require licensor approval of advertising, packaging, labeling, domain names, social handles, and the manner of displaying the mark (proper trademark usage, correct symbols, no alteration). Why: Off-brand marketing and sloppy mark usage degrade goodwill and can accelerate genericide; controlling presentation is part of controlling quality. Cross-reference: proper usage and notice in Marking Done Right and genericide risk in genericide.
[ ] Provide a written standards/brand manual, and update it. Attach a quality manual and reserve the right to update it on reasonable notice. Why: A living manual is the cheapest, most persuasive evidence that control was real and ongoing.
[ ] Address permitted reliance on the licensee's own controls, carefully. If the deal depends on a close, trusted relationship, you may rely in part on the licensee's established quality systems, but document the basis for that reliance. Why: Courts permit justified reliance on a licensee's own quality measures in close relationships, Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368 (5th Cir. 1977); Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001 (9th Cir. 1985); Tumblebus Inc. v. Cranmer, 399 F.3d 754 (6th Cir. 2005). Trap: Reliance must be justified and actual; Barcamerica rejected reliance on a winemaker's "reputation" where the licensor knew almost nothing about the wine and tasted it only casually. Reliance is a documented relationship, not a shrug.
[ ] Tie a quality breach to cure and termination. Make a material, uncured quality failure a ground for termination (Phase 9), with a short cure period and an immediate-suspension right for health/safety failures. Why: Control includes the ability to stop a noncompliant licensee; a license you cannot enforce is not control.

Worked example. Brightwater, a premium sparkling-water brand, licenses BRIGHTWATER to a regional bottler. The agreement attaches a six-page spec (source water profile, carbonation range, bottle and label artwork, shelf-life testing), requires pre-production approval of every flavor, gives Brightwater no-notice plant inspection rights, and requires quarterly lab samples. That is a controllable license. The naked version, the one that loses the mark, is a one-line clause: "Bottler shall maintain quality consistent with Licensor's standards," followed by a licensor who never visits the plant, never tests a bottle, and never sees the label until a customer complains. That second version is Barcamerica with carbonation: vigorous use, zero control, mark abandoned.

Trap (the big one). The naked-licensing defense is hard for a challenger to win, courts call it a "stringent standard of proof" because it works a forfeiture (FreecycleSunnyvale v. Freecycle Network, Inc., 626 F.3d 509 (9th Cir. 2010)). That cuts for a sloppy licensor in litigation, but do not bank on it. Whether a license is naked is intensely fact-specific (Doeblers' Pennsylvania Hybrids, Inc. v. Doebler, 442 F.3d 812 (3d Cir. 2006)), and the cure, real control, costs a fraction of the fight.

Phase 4 — Operating Quality Control in the Real World

Here is the lesson sophisticated owners learn too late: the clause is not the control. Barcamerica and Eva's Bridal both involved licensors who had (or could have had) paper rights and lost anyway because they did nothing with them. This phase is about the doing.

[ ] Calendar the control. Schedule inspections, sample pulls, audits, and approval reviews as recurring obligations on a real docket, the same discipline you apply to maintenance deadlines. Why: Judge Posner's point in Eva's Bridal is that "paper is not enough"; control happens on a calendar or it does not happen.
[ ] Actually inspect, sample, and approve, and keep the records. Conduct the visits, pull the samples, run the tests, review the ads, and retain dated proof of each. Why: Contemporaneous QC records are precisely the evidence that defeats a naked-licensing/abandonment attack years later, the licensing analog of the dated file that rebuts the three-year nonuse presumption discussed in Proving or Defeating Trademark Abandonment. Trap: Self-serving testimony assembled after the dispute carries little weight; build the record during the relationship.
[ ] Enforce nonconformities. When a licensee misses spec, issue written notices, require corrective action, re-inspect, and escalate to suspension or termination if it persists. Why: Tolerated noncompliance is uncontrolled use; the power to enforce means nothing if you never use it.
[ ] Re-vet on changes. Re-approve when the licensee changes suppliers, formulas, facilities, or service models. Why: Yesterday's approval does not cover tomorrow's cheaper tomatoes; control is continuous, not a one-time gate.
[ ] Confirm licensee use supports your registration. Ensure the licensee's specimens, dates, and manner of use are captured so the use inures to you for maintenance and enforcement. Why / Authority: Only a controlled "related company's" use inures to the owner under 15 U.S.C. §§ 1055, 1127; uncontrolled use may not count as your use at all, undermining your Section 8 filing. See Preparing a Trademark Specimen.

WHY this phase matters. Nonna Bianchi's, the family pasta-sauce brand in our abandonment guide, had a tidy quality clause and lost its mark anyway because the family never tasted a production run. The difference between keeping and losing a brand is not the drafting; it is whether anyone does the work the drafting describes.

Phase 5 — Don't Build an Accidental Franchise

Trademark law tells you to control the licensee. Franchise law penalizes you for controlling too much, plus charging a fee, plus weaving the licensee into a unified system. Step over that line, intentionally or not, and you owe franchise-disclosure and relationship duties you never planned for.

[ ] Run the three-element franchise test before signing. A franchise generally exists under the FTC Franchise Rule when three elements coexist: (1) a trademark license; (2) significant control over, or significant assistance to, the franchisee's method of operation (a marketing system / community of interest); and (3) a required payment to the franchisor. Why / Authority: 16 C.F.R. Part 436 (FTC Franchise Rule); many states add their own franchise and dealership statutes with lower thresholds.
[ ] Recognize that a disclaimer does not save you. Do not rely on a "this is not a franchise" clause. Why: Courts look past the label to oral promises, course of dealing, and actual practice. Authority: Purugganan v. AFC Franchising, LLC, 2021 WL 723916 (D. Conn. 2021); Unlimited Prepaid, Inc. v. Air Voice Wireless LLC, 2018 WL 6303852 (C.D. Cal. 2018); cf. Girl Scouts of Manitou Council, Inc. v. Girl Scouts of the U.S.A., Inc., 549 F.3d 1079 (7th Cir. 2008) (even the Girl Scouts caught by a dealership statute).
[ ] Calibrate control to the goods or services, not the whole business. Aim quality control squarely at the nature and quality of the licensed goods/services, and avoid prescribing the licensee's broader operations (mandatory hours, pricing, marketing plans, approved suppliers for everything) unless you intend a franchise. Why: Quality control trademark law requires is narrower than the operational dominion franchise law punishes; the resolution is calibration.
[ ] Watch the fee element. Understand that required payments above a modest threshold help trigger franchise status; structure consideration deliberately. Why: The fee is one of the three legs; eliminating or restructuring it can keep an arrangement out of franchise territory, but only in combination with calibrated control.
[ ] If it really is a franchise, comply on purpose. Where the model genuinely is a franchise, prepare a Franchise Disclosure Document and meet federal and state registration/disclosure duties rather than hoping no one notices. Why: Deliberate compliance is cheap; a terminated "licensee" invoking franchise-relationship laws you never knew applied is not.

Worked example. Verdant Yoga lets independent instructors open studios under VERDANT, charges a monthly fee, hands over a thick operations manual dictating class formats, playlists, signage, and pricing, and requires instructors to buy mats from an approved vendor. Its lawyers added a crisp "not a franchise" clause. But trademark license + required fee + pervasive operational control likely makes each studio a franchise regardless of the disclaimer. The fix was a choice Verdant never consciously made: either dial control back to genuine brand-quality standards, or embrace the franchise model and disclose. Make that choice on purpose, up front.

Phase 6 — Money: Royalties, Reporting, and Audit Rights

Quality control protects the asset; the financial terms are why you licensed it. The recurring failure here is not the rate, it is the verification.

[ ] Define the royalty and its base precisely. Specify the rate and the royalty base, "net sales," with an exact definition of permitted deductions (returns, taxes, freight), or per-unit, or tiered. Why: Most royalty disputes are definitional, not numerical; "net sales" undefined is a lawsuit waiting to happen.
[ ] Set minimum/guaranteed royalties and performance minimums. For exclusive deals especially, require minimum annual royalties or sales thresholds, with the licensor's remedy (conversion to non-exclusive, or termination) if they are missed. Why: An exclusive licensee who sits on the brand without selling locks you out of your own market; minimums keep the brand working.
[ ] Require regular, detailed royalty reports. Mandate periodic statements showing units, gross and net sales, deductions, and royalties due, certified by an officer. Why: You cannot audit what is never reported; reporting is the backbone of financial control.
[ ] Reserve a real financial audit right. Grant the right to audit the licensee's books on notice, with a fee-shift if an audit finds an underpayment over a stated threshold (e.g., licensee pays for the audit if it underpaid by more than 5%). Why: The fee-shift turns the audit right from a courtesy into a deterrent. Trap: A bare "licensor may audit" with no records-retention obligation and no fee-shift is rarely used and easily stonewalled; require books to be kept for a set number of years.
[ ] Address upfront fees, milestones, and most-favored terms. Cover any signing fee, milestone payments, and (for the licensee) any most-favored-licensee protection. Why: Front-loaded consideration changes the franchise analysis (Phase 5) and the bankruptcy analysis (Phase 9); know what you are creating.
[ ] Handle taxes, currency, and withholding (especially cross-border). Specify who bears sales/VAT and withholding taxes, the payment currency, and timing. Why: International licenses (Phase 11) routinely lose value to withholding nobody negotiated.

Phase 7 — Ownership, Goodwill, and Protecting the Mark

These clauses keep the mark yours through the life of the deal, and keep the goodwill the licensee generates flowing back to you.

[ ] Have the licensee acknowledge the licensor's ownership. Include the licensee's express acknowledgment that the licensor owns the mark and that the license confers no ownership. Why: Forecloses a future ownership claim and reinforces the licensor/licensee (not co-owner) relationship.
[ ] State that all use and goodwill inure to the licensor. Provide that all use of the mark by the licensee, and all goodwill arising from it, inure solely to the licensor's benefit. Why / Authority: This mirrors the statutory "related company" rule (15 U.S.C. §§ 1055, 1127) and ensures the brand equity the licensee builds is yours, not a co-owned asset. Trap: Without this clause, a long-term licensee can argue it built independent goodwill, contaminating your chain of title.
[ ] Include a no-challenge / licensee-estoppel clause, knowing its limits. Bar the licensee from challenging the validity or ownership of the mark during (and reasonably after) the term. Why: Licensee estoppel generally prevents a licensee from biting the hand that licenses it. Trap / Authority: No-challenge clauses are not bulletproof; on public-interest grounds some courts will not enforce them, especially as to genericness or where enforcement would shield an invalid mark, Idaho Potato Commission v. M&M Produce Farm & Sales, 335 F.3d 130 (2d Cir. 2003) (declining to enforce a no-challenge clause); compare the patent analog in Lear, Inc. v. Adkins, 395 U.S. 653 (1969). Draft it, but do not assume it ends every fight.
[ ] Require cooperation in registration, maintenance, and recordation. Obligate the licensee to supply specimens, dates of use, and declarations the licensor needs for Section 8/9 filings, and to cooperate in any license recordation. Why: You may need the licensee's controlled use to prove use; build in the cooperation now. See the maintenance and renewal toolkit.
[ ] Govern proper marking and notice. Require correct use of the ® or ™ symbol and any "used under license from [Licensor]" notice, and prohibit alteration or combination of the mark without consent. Why: Proper notice supports remedies and proper-usage discipline fights genericide; see Marking Done Right.
[ ] Allocate ownership of new marks, variations, and creative. Provide that any new marks, taglines, logos, or domain names the licensee creates around the brand, and any goodwill in them, belong to the licensor (with a present assignment if needed). Why: Licensees who design brand extensions can otherwise claim the very assets that orbit your mark.
[ ] Decide whether to record the license. Note that, unlike assignments, U.S. trademark licenses are generally not recorded at the USPTO and recordation is not required for validity, but some foreign jurisdictions require recordal of "registered users." Why: Avoid over-recording domestically while catching mandatory foreign recordal for international deals (Phase 11).

Phase 8 — Enforcement, Indemnity, Warranties, and Insurance

When a counterfeiter or infringer shows up, the license should already say who chases them, who pays, and who is protected.

[ ] Impose a duty to notify and a policing protocol. Require the licensee to promptly notify the licensor of suspected infringement, counterfeiting, or dilution, and define who controls any enforcement action. Why: Your licensee is often the first to spot a knockoff in its channel; harness that. Tie into a real watch and policing program.
[ ] Allocate enforcement rights and standing. Specify whether the licensor controls litigation (usual), whether the licensee must join or may sue, and how recoveries are split. Why / Authority: A non-exclusive licensee usually lacks standing to sue under Section 32; only an exclusive licensee with rights tantamount to ownership in its field is likely to have it. Clarify by contract. For the enforcement arc, see the Trademark Enforcement Toolkit and remedies.
[ ] Draft balanced indemnities. Have the licensee indemnify the licensor for product-liability, advertising, and operational claims arising from the licensee's goods/services; have the licensor indemnify the licensee for third-party claims that the licensed mark itself infringes. Why: The party that controls the risk should bear it; the licensor warrants the mark, the licensee warrants the product.
[ ] Set representations and warranties. Licensor: ownership and authority to license; (often) that it is unaware the mark infringes. Licensee: capacity, compliance with law, and product safety. Why: Reps allocate the known risks and seed the indemnities. Trap: Resist a broad licensor warranty of non-infringement and validity if the mark is young or contested; you may be guaranteeing more than you can.
[ ] Require insurance. Require the licensee to carry product-liability and commercial general-liability insurance naming the licensor as additional insured, with minimum limits. Why: Your brand will be named when a defective licensed product injures someone; insurance is the backstop behind the indemnity.

Phase 9 — Term, Termination, Wind-Down, and Bankruptcy

A license is a relationship, and most relationships end. The end is where unplanned licenses inflict the most damage, on the brand and on the balance sheet.

[ ] Define termination triggers and cure periods. Cover termination for material breach (with a cure period), for an uncured quality failure (short or no cure for health/safety), for insolvency, for change of control, and (if desired) for convenience on notice. Why: The right to terminate a noncompliant licensee is the ultimate quality-control tool; without it, control is theoretical.
[ ] Mandate cessation of use on termination. Require the licensee, on termination, to immediately stop using the mark, the brand's domain names and handles, signage, and packaging, and to transfer or cancel brand-specific digital assets. Why: A former licensee still using the mark is now an infringer, and a confusing one, because consumers were trained to associate it with you.
[ ] Negotiate a defined sell-off (wind-down) period, with continuing control. If the licensee may sell off existing conforming inventory after termination, fix the duration, cap the volume, and, crucially, keep quality control and royalty obligations alive during sell-off. Why: Quality control does not get to lapse just because the deal is ending; uncontrolled wind-down use is still uncontrolled use. Trap: An open-ended sell-off is a backdoor perpetual license; bound it tightly.
[ ] Plan for the licensee's bankruptcy. Understand that if the licensor later rejects the license in its own bankruptcy, rejection is a breach, not a rescission, and the licensee may keep using the mark on the agreed terms. Address the scenario in the contract. Why / Authority: Mission Product Holdings, Inc. v. Tempnology, LLC, 587 U.S. 370 (2019); note that 11 U.S.C. § 365(n)'s protections for "intellectual property" licensees do not expressly cover trademarks (see § 101(35A)), which is why Tempnology mattered. Trap: A licensor who assumes bankruptcy lets it cleanly reclaim the mark may be wrong; build in termination-on-insolvency and change-of-control rights instead of relying on rejection.
[ ] Specify survival. List the clauses that survive termination, confidentiality, accrued royalties, audit rights, indemnities, the no-challenge covenant, and post-termination QC during sell-off. Why: Obligations you need after the end must be drafted to survive the end.
[ ] Address residual goodwill and post-term marketing. Bar the former licensee from trading on the prior affiliation ("formerly the maker of BRIGHTWATER") beyond truthful, time-limited statements. Why: Lingering association confuses consumers and dilutes the mark you just took back.

Phase 10 — Boilerplate That Bites, and the Personal Nature of the License

"Boilerplate" is where licenses quietly leak value. A few of these clauses are anything but routine in a trademark deal.

[ ] Bar assignment and change of control without consent. Prohibit the licensee from assigning the license or undergoing a change of control without the licensor's consent. Why / Authority: Trademark licenses are presumptively personal and non-assignable by the licensee (In re XMH Corp., 647 F.3d 690 (7th Cir. 2011)); without a clause, an acquirer of the licensee may inherit your brand. This is the inverse of the licensor's assignment, which carries goodwill (see the assignment checklist).
[ ] Pick governing law and a dispute-resolution path. Choose governing law, venue, and whether disputes go to litigation, arbitration, or mediation-then-arbitration; carve out injunctive relief for mark misuse. Why: You want fast injunctive access when a licensee goes off-spec; do not let an arbitration clause slow down a brand-protection emergency.
[ ] Include notices, entire-agreement, amendment, severability, and no-waiver clauses. Standard, but confirm the entire-agreement clause does not accidentally disclaim the quality manual or schedules you rely on. Why: A merger clause that swallows your incorporated QC exhibits can gut the control regime; incorporate exhibits by reference expressly.
[ ] Add a relationship clause that matches reality. State the parties are independent contractors (not partners/agents), but remember Phase 5, a "not a franchise" recital will not override franchise facts. Why: Align the recital with the calibrated control you actually exercise.
[ ] Confirm execution authority and signatures. Verify signatory authority for both entities and that the licensing entity is the owner of record (or has a recorded chain to it). Why: A license signed by an entity that does not own the mark is built on sand.

Phase 11 — Special Situations

Real licensing programs throw curveballs. Here are the recurring ones and the clause that addresses each.

[ ] Merchandising and character licenses. When licensing a brand or character onto apparel, toys, or collectibles, control product quality and brand-appropriateness, and separate the trademark license from any copyright license in the character art. Why: A single deal may move two IP rights; license both expressly. See Copyright or Trademark? and the copyright registration checklist. For a tour of brand/character battles, Superheroes and Their Lawyers.
[ ] Co-branding. When two marks appear together, cross-license with reciprocal quality control, clear usage guidelines for each mark, and a clean exit so neither brand is left wearing the other. Why: Each owner must control the quality associated with its mark in the joint product, or risk its own naked-license exposure.
[ ] Intercompany / affiliate licenses. Paper the licenses by which a holding company licenses marks to operating affiliates, with genuine quality control. Why: "It's all one company" is not a defense; courts have found intra-corporate-family licensing naked where control was absent in fact. The control must be real even among affiliates. Authority: the related-company rule, 15 U.S.C. §§ 1055, 1127, applies to affiliates like anyone else.
[ ] International licensing and Madrid portfolios. For cross-border deals, address local "registered user"/license-recordal requirements, local validity, currency and withholding, and how the license interacts with a Madrid Protocol portfolio. Why: Some countries will not recognize licensed use, or will treat the mark as vulnerable, unless the license is recorded locally; U.S. practice differs.
[ ] Personal names, likeness, and right of publicity. When the brand is a person's name, layer a right-of-publicity license over the trademark license and address what happens if the person leaves. Why: Name brands carry both trademark and publicity rights; see Can You Trademark Your Own Name?.
[ ] Virtual goods and the metaverse. For NFTs, virtual wearables, and in-game items, define the field of use to cover (or exclude) virtual goods explicitly and extend quality control to digital execution. Why: A 2020s field-of-use clause that says "apparel" may not reach virtual apparel; see Trademarks in the Metaverse.
[ ] Gray market and first sale. Address parallel imports and resale of genuine licensed goods, and recognize the first-sale limits on controlling downstream resale. Why: Licensed goods sold abroad can return as "gray market" units; see the forthcoming first sale doctrine and gray-market goods and border tools in recording your mark with U.S. Customs.
[ ] Inherited licenses in M&A. When you acquire a brand, audit every existing license before closing for naked-licensing exposure, assignability, change-of-control triggers, and quality-control gaps. Why: You inherit the seller's quality-control duty, and its failures; an uncontrolled license can mean you bought an abandoned mark. Authority: the diligence theme runs through the forthcoming IP buyer's guide to M&A due diligence and the assignment due-diligence checklist.
[ ] License vs. coexistence agreement. Confirm you are not confusing a license (permission to use, with control) with a coexistence/settlement agreement (two owners agreeing to live side by side). Why: They solve different problems; see the settlement and coexistence checklist and forthcoming coexistence and settlement guide.

Phase 12 — Execution and Post-Signing Operations

Signing is the start of the obligation, not the end of it. This is where the calendar takes over.

[ ] Execute with correct parties and exhibits. Sign with authorized signatories, the owner-of-record as licensor, and every exhibit (quality manual, mark schedule, royalty terms) attached and incorporated. Why: An unsigned or unattached QC exhibit is the control regime you cannot prove.
[ ] Stand up the quality-control calendar immediately. Diarize the first inspection, sample pull, and approval cycle, and assign an owner inside your organization. Why: Control that is not scheduled does not happen (Phase 4).
[ ] Set up royalty reporting and audit ticklers. Calendar the first report due date and a periodic audit cadence. Why: Money and control both run on ticklers.
[ ] Capture licensee specimens and use evidence for maintenance. Collect dated specimens and use facts so the controlled use supports your registration. Why: Your next Section 8 filing may depend on it; see the maintenance and renewal checklist.
[ ] Update the portfolio docket and watch settings. Record the license internally and turn on monitoring across the licensed field and territory. Why: Coordinated enforcement (Phase 8) requires knowing who is licensed where. Anchor it in a portfolio audit.
[ ] Handle any required foreign recordal. Record the license where local law requires (Phase 11). Why: Skipped foreign recordal can invalidate licensed use abroad.

A Full Worked Example, End to End

Walk a complete deal so the phases connect.

The deal. Cobblestone Creamery, a regional premium ice-cream brand, owns the registered COBBLESTONE CREAMERY word mark and cobblestone-arch logo (Class 30, dessert goods; Class 43, café services). It wants to license the brand to Northwind Foods to manufacture and sell pint cartons through national grocery chains, while Cobblestone keeps running its own scoop shops.

Phase 1 (threshold). Counsel confirms Cobblestone is the owner of record (a 2021 assignment from the founder was properly recorded), the registration's Section 8 is current, and Northwind is financially sound with a clean food-safety record. The deal is a license (Cobblestone keeps the mark), not an assignment, and counsel flags that pervasive operational control plus a fee could create a franchise, so control will be calibrated to product quality (Phase 5).

Phase 2 (grant). Non-exclusive license of both marks, Class 30 pint cartons only (the café-services rights and scoop-shop channel are reserved), United States, national grocery and club channels, four-year term renewable on hitting volume minimums, no sublicensing without consent, all rights not granted reserved.

Phase 3-4 (quality control). An attached spec governs butterfat content, overrun, ingredient grades, allergen handling, carton artwork, and cold-chain requirements. Northwind must submit each new flavor for pre-production approval; Cobblestone has no-notice plant-inspection rights and pulls quarterly samples for lab testing. Internally, Cobblestone's QA lead is assigned to run the inspection calendar and retain dated reports, the step that keeps this from becoming a Barcamerica naked license.

Phase 5 (franchise check). Because control is aimed at the cartons (not Northwind's hours, pricing, or whole operation), and the consideration is a running royalty rather than a franchise fee for a turnkey system, the deal stays a license, not a franchise. Counsel documents the analysis.

Phase 6 (money). 6% of net sales (defined, with deductions enumerated), a $250,000 annual minimum, monthly reports, annual audit rights with a 5% underpayment fee-shift, and books retained five years.

Phase 7 (ownership). Northwind acknowledges Cobblestone's ownership; all use and goodwill inure to Cobblestone; a no-challenge covenant (drafted knowing Idaho Potato's limits); cooperation on specimens for maintenance; proper ® usage and a "manufactured under license from Cobblestone Creamery" notice; any new sub-brands belong to Cobblestone.

Phase 8 (enforcement). Northwind must report knockoffs; Cobblestone controls litigation; mutual indemnities (Northwind for product liability, Cobblestone for any claim the mark itself infringes); Northwind carries product-liability insurance naming Cobblestone as additional insured.

Phase 9 (termination). Termination for uncured breach, immediate suspension for a food-safety failure, termination on insolvency or change of control; a 90-day, volume-capped sell-off of conforming inventory with QC and royalties continuing; survival of accrued royalties, audit rights, and the no-challenge covenant; the bankruptcy scenario addressed with Tempnology in mind.

Phases 10-12 (boilerplate and operations). License is personal and non-assignable by Northwind; governing law and an arbitration clause that carves out injunctive relief for mark misuse; exhibits expressly incorporated; signed by authorized officers; QC and royalty calendars stood up on day one; specimens captured for the next Section 8; portfolio docket and brand-watch updated.

The result: Cobblestone monetized its brand in a channel it could not reach alone, and kept the mark controlled, registered, and enforceable. The money machine, not the poison.

Common Mistakes

The clause without the conduct. A beautiful quality-control clause that nobody ever exercises is the Barcamerica/Eva's Bridal fact pattern, and it abandons the mark for everyone, not just the licensee. Control in fact, not on paper.
"Consistent with Licensor's high standards" as the entire QC regime. That is a wish, not a standard. Attach a measurable spec and a brand manual.
An open-ended field of use. Licensing "the brand for consumer products" hands over goods you cannot vet or inspect; narrow the field to what you can actually control.
Building an accidental franchise. Trademark license + required fee + pervasive operational control = a franchise no disclaimer can erase. Calibrate, or comply on purpose.
Silent sublicensing and assignment. Trademark licenses are presumptively personal; say no (or yes with consent and back-to-back QC), or risk an uncontrolled chain and an unexpected new licensee after the licensee is acquired.
No audit teeth. A royalty right with no defined base, no reporting, and no fee-shifting audit is an honor system. Define the base, require reports, and make underpayment expensive.
Forgetting the logo's copyright. A trademark license does not convey the separate copyright in the logo artwork; address both.
An evergreen license with no off-ramp. Auto-renewal with no performance condition can trap you with a deteriorating licensee, the breeding ground of naked-licensing exposure.
Letting QC lapse during wind-down. Quality control and royalties must continue through any sell-off period; an uncontrolled wind-down is still uncontrolled use.
Assuming bankruptcy hands the mark back cleanly. After Mission Product Holdings v. Tempnology, rejection is breach, not rescission; rely on insolvency and change-of-control termination rights instead.
Skipping licensee diligence and inherited-license audits. Vet the licensee before signing, and audit existing licenses before you acquire a brand, you inherit their quality-control failures.
Over-trusting the no-challenge clause. Licensee estoppel has public-interest limits (Idaho Potato, Lear v. Adkins); useful, but not a guarantee.

Related Resources

Trademark Overview: Obtaining Protection and Licensing Your Mark — the narrative companion on licensing, naked licensing, and the accidental franchise.
Trademark Licensing Agreements: Quality Control and Avoiding Naked Licensing — the forthcoming deep dive this checklist operationalizes.
Use It or Lose It: How Trademarks Are Abandoned — how naked licensing forfeits the mark for everyone.
The Dawn Donut Rule: Why a Federal Registration Doesn't Always Let You Sue — the foundational quality-control case.
Transferring a Trademark: The Assignment Recordation Checklist — when the deal is a sale, not a rental.
Trademark Assignment Due-Diligence Checklist: Validating Chain of Title — confirm you own what you are licensing.
Proving or Defeating Trademark Abandonment: An Evidence Checklist — the QC records that defeat a naked-licensing attack.
How Brand Rights Are Born, Built, and Lost: A Field Guide to Trademark Use — the controlled use that licensing depends on.
Goods, Services, and the Nice Classes: A Classification Checklist — scoping the field of use.
Keeping Your Registration Alive: Maintenance, Renewals, and the Deadlines That Kill Marks — why licensed use must support your Section 8/9.
Cancelling a Registration at the TTAB: A Petitioner's Checklist — naked licensing as a cancellation ground.
Trademark Settlement and Coexistence Agreement Checklist: Negotiating Brand Peace — the agreement a license is sometimes confused with.
Setting Up a Trademark Watch and Policing Program: A Checklist — coordinating enforcement with licensees.
Conducting a Trademark Portfolio Audit: A Brand Owner's Checklist — auditing your licenses and marks together.
Can You Trademark Your Own Name? Surnames, Fame, and the Right of Publicity — name-brand and likeness licensing.
Trademarks in the Metaverse — licensing into virtual goods.
Trademark Licensing and Assignment Toolkit: Monetizing and Transferring Marks — the parent toolkit.

Selected Authorities

Statutes: Lanham Act § 5, 15 U.S.C. § 1055 (related-company use inures to the owner); § 45, 15 U.S.C. § 1127 (definition of "related company"; definition of abandonment / loss of significance); § 10, 15 U.S.C. § 1060(a)(1) (assignment with goodwill; intent-to-use anti-trafficking restriction); §§ 8, 9, 71, 15 U.S.C. §§ 1058, 1059, 1141k (maintenance and renewal); § 32, 15 U.S.C. § 1114 (infringement / who may sue). Bankruptcy: 11 U.S.C. § 365(n) and § 101(35A) (intellectual-property licenses; trademarks not expressly included).

Regulations: FTC Franchise Rule, 16 C.F.R. Part 436 (the trademark + control + fee definition of a franchise); plus state franchise and dealership statutes.

Cases: Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358 (2d Cir. 1959) (affirmative duty of quality control); Barcamerica Int'l USA Trust v. Tyfield Importers, Inc., 289 F.3d 589 (9th Cir. 2002) (naked-licensing abandonment; bare right to inspect insufficient); Eva's Bridal Ltd. v. Halanick Enters., Inc., 639 F.3d 788 (7th Cir. 2011) (no standards, no control, mark abandoned; "paper is not enough"); FreecycleSunnyvale v. Freecycle Network, Inc., 626 F.3d 509 (9th Cir. 2010) (naked licensing; stringent standard of proof for the defense); Stanfield v. Osborne Indus., Inc., 52 F.3d 867 (10th Cir. 1995) (naked licensing); Doeblers' Pa. Hybrids, Inc. v. Doebler, 442 F.3d 812 (3d Cir. 2006) (naked licensing is fact-specific); Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368 (5th Cir. 1977), Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001 (9th Cir. 1985), and Tumblebus Inc. v. Cranmer, 399 F.3d 754 (6th Cir. 2005) (justified reliance on a licensee's own controls in a close relationship); In re XMH Corp., 647 F.3d 690 (7th Cir. 2011) (trademark licenses presumptively non-assignable by the licensee); Idaho Potato Comm'n v. M&M Produce Farm & Sales, 335 F.3d 130 (2d Cir. 2003) (limits on no-challenge clauses); Lear, Inc. v. Adkins, 395 U.S. 653 (1969) (patent licensee estoppel, background); Mission Product Holdings, Inc. v. Tempnology, LLC, 587 U.S. 370 (2019) (rejection of a trademark license in bankruptcy is breach, not rescission); Purugganan v. AFC Franchising, LLC, 2021 WL 723916 (D. Conn. 2021) and Girl Scouts of Manitou Council, Inc. v. Girl Scouts of the U.S.A., Inc., 549 F.3d 1079 (7th Cir. 2008) (accidental franchise / dealership statutes).

Secondary sources: J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition ch. 18 (licensing, quality control, naked licensing); Restatement (Third) of Unfair Competition § 33 (1995) (licensing and the control requirement).

This checklist is general information from Rightsy (rightsy.io), not legal advice. Trademark licensing turns on specific facts and on law that varies by circuit and changes over time; the quality-control and franchise lines in particular are intensely fact-specific. Confirm current statutes, rules, and case law, and consult qualified trademark counsel, Rightsy's virtual trademark attorneys among them, before drafting, signing, or relying on any license. Rightsy's trademark and logo search, assignment records, and TTAB proceedings database can help you vet a mark, trace its chain of title, and pressure-test a licensing program before you commit.

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