Many of our products are licensed. What this means is that 8%, 10%, 12% or more of the purchase price of your school's product is returned to your university as funds for various programs at your university. We work with CLC, Learfield Licensing Partners (note below), Fermata, and a number of schools who administer their own independent licensing program.
This does not mean that the school owns the image that we have designed, we continue to hold copyright upon that image; however, they have granted their permission for us to use their school name along with that particular image, with that particular formatting for the personalization in each of our products. It is a fairly long process to obtain licensing on new products, especially with hundreds of schools to process the licensing request with.
As we head into licensing season, we evaluate how much sales a particular school has generated compared with the royalty rate that we have to advance to the school as well as the percentage royalty the school will take this next year. We are shocked to find some schools moving their royalty rate as high as 15%. Unfortunately, we cannot carry that extra cost and manage to manufacture, in the U.S., products for schools with rates that high. We will be discontinuing a number of schools for the reasons of poor sales numbers that do not allow us to recoup the advance royalty costs paid last year as well as ones that we cannot justify raising our prices high enough to cover the royalty rates being asked.
We do apologize. We do our best to pay living wages here in the U.S. and are proud to help alumni support their university community. We value education; however, to continue providing elegant, quality products for the rest of the universities we sadly will be discontinuing these schools.
Note: Learfield Licensing Partners is now covering the licensing for schools previously working with SMA and LRG as those two organizations merged. We do not have full details of the merger but do know that the previous licensing agencies of SMA and LRG are now combined and our licensing is managed through Learfield.