How accurate are Opagio's royalty rate benchmarks?
Short Answer
They are indicative. The free Single-Asset Value Check applies a published median royalty rate for the asset type, with its source, but real rates vary by deal, so a formal valuation needs a rate benchmarked from comparables.
Full Explanation
Published royalty rate benchmarks summarise past licence agreements, and specific deals vary widely around them: a licensee with strong bargaining power may negotiate a lower rate; a licensor seeking reference customers may accept less. Factors creating variation: 1) bargaining power, 2) exclusivity (exclusive licences command premiums), 3) territory (worldwide vs. single country), 4) support or services bundled in, 5) economic conditions when the licence was signed. What Opagio does: the free Single-Asset Value Check applies a published median royalty rate for the asset type you choose, shows the rate it applied and its source, and labels the result illustrative; it is a starting point, not a benchmark for your asset. In Opagio Intangibles, the Asset Valuator runs Relief from Royalty on the rate you have benchmarked from comparable licences, with sensitivity analysis across the range. Sensitivity matters because the value is proportional to the rate: if your asset is valued at £5M using a 3% royalty rate, a one percentage point change shifts value by a third (to about £6.7M at 4%, or £3.3M at 2%). Be transparent: include sensitivity showing how the valuation changes across the plausible royalty rate range, and don't present a single £5M number as settled when the range is really £3.3M-£6.7M depending on the rate.
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Further Reading
How do you value a franchise agreement as an intangible asset?
Franchise agreements are valued using the income approach based on the present value of franchise fee income and royalty streams over the remaining agreement term, adjusted for renewal probability.
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