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For the licensor, holograms help to protect brand integrity by distinguishing between approved products and counterfeits – acting as a form of quality control. Licensees are expected to purchase carefully designed holograms from a preferred supplier and incorporate into the packing or labelling of any branded item they produce.
Simultaneously, holograms also allow licensors to measure full reporting as each licensee should supply a parallel reconciliation between holograms purchased and used on the one hand and products sold on the other. By comparing the two figures, any disparities are quickly visible and licensors (and royalty auditors) are able to investigate further.
There have been noted occasions where licensees have only reported numbers of holograms used as opposed to both hologram use and products sold – which means they have greatly underpaid on their royalties owed. Not only is this financially damaging for the licensor, it also means that thousands of unapproved products can enter the market place, which could have potentially damaging consequences for brand value.