Sell-off period
Sell-off period: A sell-off period is the window after a licensing agreement terminates or expires during which the licensee may continue selling licensed product already manufactured — typically 90 to 180 days, set by the agreement. Sell-off sales remain royalty-bearing and reportable: the licensee owes royalties on them at the contractual rate and must continue submitting statements for the period, even though the agreement itself has ended.
Sell-off rights almost always carry conditions. Manufacturing must stop at termination, so only inventory on hand at the termination date qualifies; many agreements require a certified inventory statement within a set number of days of termination and prohibit off-price or close-out channels during sell-off. Unsold inventory at the end of the window usually has to be destroyed or, in some agreements, purchased by the licensor.
Unreported sell-off sales are a recurring audit finding, and the cause is almost always operational rather than deliberate: the agreement is closed in the system at termination, the reporting workflow stops with it, and product that keeps shipping for another two quarters never gets a statement.
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