Kishore Biyani’s Future group, which operates in financial services, insurance and organised retail, has decided to follow the Tata lead to put in place a master licence agreement for the use of the Future name, logo and trademarks by its group companies.
In the Tata group the principal holding company, Tata Sons, has an agreement with group companies that use the Tata name and logo.
The first company in the Future group to enter into such an agreement is Future Ventures. It has entered into a non- exclusive, non- transferable licence to use and reproduce the registered trademarks, subject to brand specified usage guidelines.
For this right Future Ventures has agreed to pay royalty that will be Rs 1 crore in the financial year 2011, the amount gradually going up to Rs 2.44 crore in 2015. The royalty is to be paid to Future Ideas Company, a promoter group entity, a top Future official told Financial Chronicle.
Harish Bijoor, chief executive officer of Harish Bijoor Consults, saw the Future move as “basically setting a process together and putting a monetised value to their balance sheet.”
The royalty is payable quarterly. The BSE- listed Future Ventures has also agreed to pay an additional royalty of 0.1 per cent of turnover.
However, the fixed royalty already paid will be subtracted from the amount payable as per the turnover formula, to determine the sum of additional royalty if any, payable. The additional royalty is to be paid within 10 days of the annual accounts being approved by the board of directors of Future Ventures.
Ashish Chakravarti, chief investor relations at the Future group, said Pantaloon Retail (India) & Future Capital Holdings do not pay royalty to Future Ideas Company.
“Instead they pay a fixed sum which I believe is not very significant,” said Chakravarti.
Arvind Singhal, chairman of Technopak Advisors, said, “It’s very unusual that the Future group is charging royalty for their brands. Its too early for them to charge royalty.”
Tractor and utility vehicles major Mahindra & Mahindra recently created brand books, which specify how the Mahindra brand should and can be used. The group also set up a corporate brand council under the leadership of chief brand officer Ruzbeh Irani.
At the $67.4 billion Tata group, the Tata brand equity and business promotion agreement codifies the usage of the Tata logo and name.
However unlike the Tata group where eligible companies that sign the agreement pay royalty to Tata Sons, M&M does not charge its subsidiaries and associates for the use of the M&M logo or the ‘Rise’ brand.
Source : Financial Chronicle
