A. A well-drafted termination provision should give the licensor the right to terminate the agreement upon the occurrence of certain events, including:
- Licensee’s failure to obtain the licensor’s product approvals prior to the distribution of the licensed goods.
- Licensee’s failure to introduce product prior to the product introduction date;
- Licensee’s failure to meet the initial shipment date;
- Licensee’s failure to maintain product liability insurance;
- Licensee’s failure to make the minimum royalty payments;
- Licensee’s failure to continuously sell or market products;
- Recall of the product by the Consumer Product Safety Commission;
- Licensee’s protracted inability to conduct business; or
- Licensee’s repeated failure to pay royalties when they come due.