Reference no: EM131554792

Refusing to Waive a Fee

As the Licensing Program Coordinator for your school, you evaluate proposals from vendors who want to make or sell merchandise with the school's name, logo, or mascot. If you find the product acceptable, the vendor pays a $250 licensing fee and then 6.5% of the wholesale cost of the merchandise manufactured (whether or not it is sold). The licensing fee helps to support the cost of your office; the 6.5% royalty goes into a student scholarship fund. At well-known universities or those with loyal students and alumni, the funds from such a program can add up to hundreds of thousands of dollars a year.

On your desk today is a proposal from a current student, Meg Winston.

I want to silk-screen and sell T-shirts printed with the name of the school, the mascot, and the words "We're Number One!" (A copy of the design I propose is enclosed.) I ask that you waive the $250 licensing fee you normally require and limit the 6.5% royalty only to those T-shirts actually sold, not to all those made.

I am putting myself through school by using student loans and working 30 hours a week. I just don't have $250. In my marketing class, we've done feasibility analyses, and I've determined that the shirts can be sold if the price is low enough. I hope to market these shirts in an independent study project with Professor Doulin, building on my marketing project earlier this term. However, my calculations show that I cannot price the shirts competitively if just one shirt must bear the 6.5% royalty for all the shirts produced in a batch. I will of course pay the 6.5% royalty on all shirts sold and not returned. I will produce the shirts in small batches (50-100 at a time). I am willing to donate any manufactured but unsold shirts to the athletic program so that you will know I'm not holding out on you.

By waiving this fee, you will show that this school really wants to help students get practical experience in business, as the catalogue states. I will work hard to promote these shirts by getting the school president, the coaches, and campus leaders to endorse them, pointing out that the money goes to the scholarship fund. The shirts themselves will promote school loyalty, both now and later when we're alumni who can contribute to our alma mater.

I look forward to receiving the "go-ahead" to market these shirts.

The design and product are acceptable under your guidelines. However, you've always enforced the fee structure across the board, and you see no reason to make an exception now. Whether the person trying to sell merchandise is a student or not doesn't matter; your policy is designed to see that the school benefits whenever it is used to sell something. Students aren't the only ones whose cash flow is limited; many businesses would find it easier to get into the potentially lucrative business of selling clothing, school supplies, and other items with the school name or logo if they got the same deal Meg is asking for. (The policy also lets the school control the kind of items on which its name appears.) Just last week, your office confiscated about 400 T-shirts and shorts made by a company that had used the school name on them without permission; the company has paid the school $7,500 in damages.

Write a letter to Meg rejecting her special requests. She can get a license to produce the T-shirts, but only if she pays the $250 licensing fee and the royalty on all shirts made.