Ancient Scroll Describing Royalties

Would you believe that an ancient scroll describing royalties has been discovered in an area of known biblical era occupation? The scroll, supposedly found in the side of a mountain, sets forth the following:

Dealing Fairly in Life and Commerce

For there to be peace, harmony and mutual profit in communities where the people having property or other assets which can be used by others reach an agreement for the sharing of benefit arising from the use of the asset.

The owner of the land allows an individual to use the property in return for a share of the benefit received by the person using the property. If the property is used to grow something which can be sold the process may become known as “sharecropping”. The amount and terms of benefit can be as agreed. In the case of real estate, the benefit sharing can be of goods, services or some form of money.

The owned asset can be land, vessels, vehicles, intellectual property or the personal skills of the owner such as being a performer, athlete or professional warrior. The use of a ship or truck can be allowed by the owner for a percentage of the revenue received by the operator of the asset. In the case of an invention or manuscript whatever is paid by the party using the property can be paid or shared by the recipient to others. The principle is the same, the owner or creator of an asset can receive benefit either using the asset themselves or from allowing others to use the asset.

Therefore, both assets of use to others must be identified, as must be those wishing to use the asset. The payment of the negotiated fee for the use of another’s asset becomes known as a royalty. The asset owner allowing use for a fee by another will be called a royalty issuer or licensor and the user of the property a licensee. If the asset is a brand name and business model the terms franchisor and franchisee are used to describe the roles.

In order for there to be a fairness in the creation of a monetary relationship between an asset owner and an asset user the following terms must be negotiated: a full and fair description of the asset, the amount to be paid for the royalty to use the asset, the percentage of revenue received by the user of the asset, the period of time the royalty is to be paid.

In the case of financing businesses, the asset sought by the owner of the business is money and that offered for the money is a percentage of the defined revenue of the business for an agreed period.

It will be necessary for there to be both investor protections and an ability of the royalty issuer to redeem the royalties on terms agreed at the time of the transaction.

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The right answer to the question posed in the first sentence is “no”. The reason for the “no” being the right answer is that we have not yet found the right location in which to bury the scroll.

Arthur Lipper, Chairman, British Far East Holdings Ltd.

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