What term describes the guaranteed minimum payment in a licensing deal?

What term describes the guaranteed minimum payment in a licensing deal?

• A. Advance
• B. Minimum Guarantee
• C. Royalty
• D. Residuals

Answer: (B)

In licensing deals, the guaranteed minimum payment is the minimum amount the licensor is promised to receive, regardless of how well the product performs. This creates revenue security for the rights holder and is often recoupable against future royalties if the deal specifies that structure. This differs from an upfront advance, which is paid before any sales and may be recouped against royalties, and from royalties, which are payments based on actual sales or usage. Residuals are ongoing payments for continued exploitation, not a guaranteed floor. So the term that describes the guaranteed minimum payment is the minimum guarantee.

In licensing deals, the guaranteed minimum payment is the minimum amount the licensor is promised to receive, regardless of how well the product performs. This creates revenue security for the rights holder and is often recoupable against future royalties if the deal specifies that structure.

This differs from an upfront advance, which is paid before any sales and may be recouped against royalties, and from royalties, which are payments based on actual sales or usage. Residuals are ongoing payments for continued exploitation, not a guaranteed floor. So the term that describes the guaranteed minimum payment is the minimum guarantee.