Royalty reporting and quarterly statements

After launch, you report sales to the licensor and pay royalties on a regular schedule, most often quarterly. Accurate, on-time reporting builds trust and is a core contractual obligation.

A royalty report (or royalty statement) typically lists, for the reporting period, the products sold, units, gross sales, allowed deductions, the royalty base (for example, wholesale or net sales, see 4.3), the royalty rate, and the royalty owed. Many licensors provide their own template; use it exactly as instructed. Reports are usually due within a set number of days after each quarter ends, often 30 to 45, with payment due at the same time, though this varies by deal.

If you paid an advance or owe an MG, your royalties are usually credited against it until it's recouped. Any shortfall on the MG may be due at a set date or the end of the term (see 8.3). Payments to Japanese licensors may be subject to withholding tax, depending on tax treaties, so consult a tax advisor.

Keep detailed sales records for several years. Most contracts give licensors the right to audit your books, and clean records make audits routine rather than stressful.