Under‑reported sales and unauthorized asset use by licensees
Definition
In opaque, spreadsheet-driven licensing environments, some licensees can deliberately under‑report sales, misclassify products, or continue using assets after license expiry, leading to hidden royalty losses and unapproved exploitation of brand assets.
Key Findings
- Financial Impact: Industry revenue‑leakage research notes that failing to bill for all services or products and unresolved billing disputes can lead to complete revenue loss on affected transactions; in licensing portfolios with significant sales, even a small percentage of under‑reported or unauthorized activity can translate into millions in lost royalties over time.
- Frequency: Monthly
- Root Cause: Licensors often lack integrated visibility into licensee sell‑through data and rely on self‑reported spreadsheets without automated reconciliation to contract terms, creating an environment where intentional under‑reporting or post‑expiry usage can go undetected for long periods.
Why This Matters
This pain point represents a significant opportunity for B2B solutions targeting Marketing Services.
Affected Stakeholders
Brand licensing managers, Royalty audit teams, Finance and revenue assurance, Legal (enforcement and disputes), Licensee sales and finance teams
Deep Analysis (Premium)
Financial Impact
$1.2M+ from unresolved licensing disputes in finance • $1.2M+ scrap costs plus royalty losses from invalid materials • $1.5M+ in lost royalties from peak-season under-reporting
Current Workarounds
Analytics Manager extracts data from retail POS system (SAP/Oracle), matches to licensing spreadsheet; identifies orphaned SKUs; escalates to Finance • Analytics Manager pulls data from multiple sources (accounting system, sales system, licensee reports); manually reconciles in Excel; creates ad-hoc pivot tables • Analytics Manager pulls Shopify revenue report, cross-references licensee's submitted Excel file, flags discrepancies via email to Account Director
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Methodology & Sources
Data collected via OSINT from regulatory filings, industry audits, and verified case studies.
Related Business Risks
Royalty under‑collection and missed renewals in brand licensing
Excess manual administration and rework in licensing operations
Cost of poor quality from misapplied rights and brand misuse
Delayed royalty collections due to manual reporting and disputes
Lost licensing and campaign capacity from rights bottlenecks
Regulatory and contractual non‑compliance exposure in licensing
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