Merchandise licensing is usually profitable for both the licensor and the licensee. Some licenses, such as Barbie or Disney classics have a perennial appeal, and others are much more difficult to predict, such as licenses for new product or, related to events of a short duration such as a sporting event or a film release.
From a manufacturing or retailers perspective, buying the licensing rights to a popular character can significantly increase the sales of a basic product such as a T shirt, colouring book or pencil case. It will differentiate your product in the market place and increase its appeal, as long as you have chosen the correct license.
You can probably make a slightly higher margin, but need to cost carefully to ensure your royalties are taken into account, and maybe a contingency for royalty minimums and the higher risk of markdowns is covered.
Licensed product may interest Buyers who have not previously dealt with you, and once you have an account open with them because they want the license, you may be able to sell other unlicensed product to them.
What do you need to provide
Once you know the product and the license you want to use, the licensor will want to know about the products sales history in its unlicensed version, or perhaps with a different licence .They will want a detailed business plan for the promotion, marketing and sale of licensed merchandise. They will want to know target clients and estimated sales. Their interest will be in granting the license to whoever can produce the most revenue for them.