I've built a small brand over the last few years under my Iowa LLC. I'm planning to sell the company but I want to keep the brand name for myself and license it back to the buyer. Has anyone done this? What do I need to watch out for in Iowa specifically? I don't want to accidentally give away the name in the asset sale.
LLC Sale
I want to sell my Iowa LLC but keep the brand name
You neeed to be veroy explicit in the purchase agreement that the brand name and any trademarks are excluded from the sale. If it's just an asset sale, the default is usually that only listed assets transfer. But if the name is tied to the LLC's registration or your domain, you have to carve those out separately.
Is the brand name actually registered as a trademark? That changes things a lot. If it's just a DBA or a logo you've used, you have more flexibility. But if you have a federal trademark, you'll need to assign or license it properly
No federal trademark yet. Just the business name registered with the Iowa Secretary of State and a domain. I've been using it consistently for about four years.
I'm not a lawyer, but I went through something similar in Nebraska. The tricky part was that the LLC name itself was the brand. When we sold the assets, the buyer wanted the LLC name too. We ended up forming a new LLC for the brand and licensing it. Cost a bit extra but kept things clean.
You might want want to look into whether Iowa allows you to keep the LLC name registered while selling the operating assets. Sometimes the name is tied to the entity, so if yoou sell the entity itself (membership interest sale), the name goes with it. Asset sale is probably safer for keeping the name.
Just make sure the buyer actually agrees to license it back. If they don't, you could end up selling the business and then having to rebrand from scratch. Get a licensing agreement drafted before you sign anything.
Also, if the brand name is part of your domain, you'll need to transfer or redirect that. Buyers often assume the doamin comes with the business. Be clear about who keeps it.
One more thing: Iowa has a trade name registration process separate from LLC formation. If you've registered the brand as a trade name, you might be able to keep keep that registration even if the LLC is sold. Check with the Secretary of State.
Thanks, everyone. I hadn't thought about the domain issue or the trade name registration. I'll look into both. Anyone know if a licensing agreement needs to be filed with the state?
Generally no, licensing agreements aren't filed with the state unless you're dealing with certain types of intellectual property. But you might want to record it with the USPTO if you ever register the trademark. For now, just a solid contract between you and the buyer should suffice.
I'd also recommend talking to a local business attorney. Iowa-specific rules can be quirky, and you don't want to miss a filing that could invalidate your name rights later.
And make sure the buyer indemnifies you if they use the brand in a way that causes problems. You don't want to be on the hook for their mistakes just because you own the name.
All good points. I'd be curious to hear how it turns out. Please update us if you go through with it.