The Auditor: Clément Franceschini
Crunching the numbers with Clément Franceschini, EMEA Partner- Insight Licensing Services s.a.s
One word Royalties – get it right.
When it comes to licensing, royalty audit most important safeguard of the business. Can you explain why is it so important for both Licensee and Licensor to understand their positions?
A royalty audit is not always welcome by licensees as it would indicate a lack of trust in the relationship. But most companies perceive their licensees as “reliable” partners. Though trust should not exclude a licensor’s right to ensure their brand is exploited accordingly. Indeed, a royalty examination does not fall under regulatory requirements conducted by external auditors. Also, we should keep in mind that most companies trust their employees but still verify their expense claims…
Nonetheless, licensee’s position can be understood sometimes.
Part of the solution would be that licensors disclose early that a royalty review would be ultimately conducted. Indeed, most audits performed show monetary findings resulting from clerical, accounting errors or omissions. And in most cases, it is about correcting mistakes from the past to establish best practices going forward. We strongly believe that royalty audit reinforces confidence in the information sent and received by the parties.