Is it true that if there is a rip off company, like a company that makes fake Gucci clothing, they have to pay some “royalty fee” to Gucci?
In: Economics
No, knock-offs don’t pay fees, but might have to pay penalties/fines if they get caught because what they’re doing is illegal…
Where you might see a royalty fee is where companies license their name to products that aren’t their core business. Gucci makes clothing and accessories like purses. But they don’t make eye glasses or fragrances. Instead, companies like eye glass maker Luxxotica or a fragrance house might work with Gucci to develop a product in their style, and then pay a royalty fee for each pair of Gucci-branded eye glasses sold or each bottle of Gucci perfume/cologne sold.
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