Glossary
Minimum guarantee (MG)
Minimum guarantee (MG): A minimum guarantee (MG) is a contractually committed royalty floor — the minimum amount the licensee owes the licensor regardless of how much licensed product actually sells. If earned royalties fall short of the MG by the end of the period (or contract term), the licensee pays the difference. MGs are common in licensing agreements with premium properties or new product launches.
// In practice
A 3-year contract with a $75,000 MG against a 10% royalty rate. By end of year 1, earned royalties total $20,000. If the MG is structured as $25,000/year, the licensee owes a $5,000 shortfall payment.
// Related terms
Related glossary terms
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