Use Your Trademark to Create Passive Income

If I told you a trademark is the best way to protect your brand, you probably wouldn’t be too surprised. Most business owners know that without a registered trademark your brand is vulnerable to copycats. 

What fewer business owners realize is that registering a trademark is also the first step towards monetizing your brand. Let me explain. 

A trademark is a piece of intellectual property. And like all forms of intellectual property, when you establish ownership over your brand with a federal trademark it gives you the right to exclude others from using it. It also allows you to grant the right to use your trademark to others. 

This is where things get interesting. 

After you build a valuable brand and establish trademark ownership over it, you can license the trademarked asset to others who want to leverage your brand’s reputation to do business. In short, you can use your trademark to generate passive income, simply by allowing someone else to use it.

Sound intriguing? Well, here are 3 ways that you can leverage your trademark to generate passive income for your business. 

 

Merchandising

Merchandising is a powerful way to turn a trademark into a source of passive income – especially for creatives. Everything from logos and mascots, to slogans and jingles can be turned into products and sold to fans and customers. Not only do these products create an additional revenue stream for your business, but they also serve as free marketing when your customers use them. 

Most importantly, this strategy is widely used by businesses of all sizes. From small startups and solopreneurs, to multinational corporations, any business can generate passive income by turning their trademark into a product. 

 

Here’s how you can utilize the strategy as a solopreneur.

1. 1. Start by identifying a range of products that you could successfully market to your core audience. The key to doing this properly is understanding your audience and their tastes. If your core audience consists of young mothers climbing the corporate ladder, branded power tools might not be the best product. Similarly, if your audience values exclusivity, it might make sense to utilize the principles of supply and demand by doing limited releases. 
   2. Choose your production partners, and sales and marketing tools. Assuming your goal is passive income, you’ll need to assemble the tools to create an automated system for sales, marketing and distribution. Fortunately, there are a ton of options available to businesses of all sizes. Platforms like Shopify and Amazon make it relatively simple for businesses to build an online storefront, and drop ship products anywhere in the country. And if you need help setting up your workflow, you can alway hire someone from Fivver or Upwork. 
   3. Focus on your core business, while your products generate passive revenue. Once you’ve set up a system for selling your branded products, the only thing left to do is enjoy the fruits of your labor. 

 

Examples: 

For media companies, merchandising is a major source of revenue. Marvel Studios for example was born from the idea that producing movies featuring Marvel superheroes would be a major driver of toy sales. 

I’ve also seen regional brands utilize this strategy to generate additional revenue, AND capitalize on local pride. Wawa and Buc-ee’s are two great examples of this. 

Content creators have also utilized this strategy masterfully. For instance YouTube phenomenon Mr. Beast has lent his brand to a line of chocolate bars. Proof that the only true limitation when it comes to merchandising is your own imagination. 

 

Sponsorships and Endorsements

If your brand boasts a sizable audience, sponsorships and brand collaborations may be a great way to generate passive income. Essentially, a sponsorship or brand collaboration is when another business pays you for the right to be seen out in public with your brand. It may consist of you posting an ad in your newsletter, or plugging a product in your next podcast. The business you’re partnering with gets to build awareness for their brand, and you get paid for making the introduction. 

 

Here’s how you can utilize the strategy. 

1. 1. Build an audience. Unlike merchandising, generating money from sponsorships and brand collaborations requires a sizable audience. That’s because businesses are paying you for the attention and awareness you can generate for them. You don’t have to build an audience through social media either. Email newsletters and blogs are often an even more effective method of generating an engaged following. 
   2. Find businesses that are in alignment with your brand. Some solopreneurs are fortunate enough to have brands knocking down their door for an opportunity to partner with them. Just because you’re not in that group, doesn’t mean there aren’t deals out there for you. You just have to put in some effort to find them. Search for businesses that offer complimentary products or services, or who are looking to engage with the people in your audience, and pitch them on the benefits of a collaboration.
   3. Perfect your pitch. As you pitch to more and more companies, focus on continuously improving your ability to sell the power of your brand. To do this, you’ll have to track and analyze data about engagement. Let the numbers from successful past collaborations tell the story, and soon companies will be knocking down your door for the chance to collaborate.

 

Don’t forget brand collaborations

This post focuses on passive income. Hence the breakdown of brand sponsorships and endorsements. However, I don’t want to forget to mention brand collaborations. A brand collaboration occurs when two businesses partner in a way that introduces them to one another’s audience. So instead of being paid by the company you’re sharing your platform with, they’re giving you exposure to their audience. 

This approach may not lead to immediate income, but it can still lead to revenue in the future by introducing you to new potential customers.

 

Franchising

Last but not least is franchising. Franchising is a business model where a trademark owner licenses their brand, business model, and operational know-how to an entrepreneur in exchange for franchising fees and a portion of the revenue (i.e., a royalty). Essentially, independent entrepreneurs operate individual stores, while the owner of the trademark (the franchisor) shares in their success without having to do any additional work.

Franchising dates back to 17th century europe. And after experiencing a boom in the 1800s, it’s become one of the most profitable ways to leverage a brand. Famous international franchises include McDonald’s, 7-Eleven, and UPS to name a few. 

Before you can franchise your business, you must build a profitable business model that is easily repeatable under a multitude of circumstances. Essentially, you want to create a system and process for running your business that anyone could operate successfully. That requires an immense amount of organizational skills. You’ll also need to follow all state and federal laws regulating franchises to the t, or risk facing heavy fines. 

In the end choosing to franchise your business is not a decision that should be taken lightly. However, it is possible for even small businesses to find success and generate income through the franchise model. uBreakiFix is a perfect example.

 

Ready to Monetize your Brand? Take the First Step Today

If you’re interested in leveraging your brand to generate passive income, remember that the first step is to register a federal trademark. A registered trademark provides nationwide protection for your brand, locking in its value and ensuring potential partners that you’re ready to do business.

If you’re interested in registering a trademark, or have questions about the process, schedule a FREE no strings attached discovery call to learn more about our process and how we can help level up your brand.