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Some of the biggest, most venerable brands in bedding were built through licensing arrangements, in which a brand contracts with a network of independent mattress producers to manufacture products under its flag.
There are fewer licensing groups today, but they still represent a significant part of the bedding business and are especially effective for companies that want to expand their reach overseas.
As a business model, it has big upsides: For the licensor, it expands manufacturing capacity without capital investment while helping to spread the reach of a brand, both domestically and internationally.
“It’s a win-win: a national brand powered by independent, locally run plants that manufacture close to home and tune products for their customers,” says Laurie Tokarz, president and CEO of Oak Lawn, Illinois-based licensing group Restonic Mattress Corp. Restonic has six domestic factories and 18 international licensees covering more than 50 countries.
Susan Mathes, executive vice president of Therapedic International, a licensing group based in Princeton, New Jersey, notes that through licensing deals, “regional manufacturers are able to meet unique regional needs, while together (licensor and licensee) can serve the needs of national retailers.”
And by facilitating production closer to retailers and consumers, licensing agreements “reduce shipping costs, reduce import duties or tariffs, and (allow for) faster delivery to retailers or consumers,” Mathes says.
“Internationally, licensees can adapt product lines to suit local preferences,” she adds. “This increases the chance of success in diverse markets while staying under a unified brand.” Therapedic has 10 domestic and 17 international licensees that produce Therapedic-branded mattresses across 56 countries. The company also has 15 licensees that manufacture Therapedic sleep accessories.
Lou Paige, president and CEO of Chicago-based licensing group Englander, says the licensing model helps licensors and licensees share ideas, improving both businesses.
“The licensee model is an excellent opportunity for domestic manufacturers to share their marketing and best practices with new partners but also for the domestic suppliers to learn from the international community,” Paige says. “It is a partnership of sharing ideas about how to best service the consumers and educate them on the importance of the mattress in their health and well-being.” Englander has 19 international licensees serving 35 countries in markets from Central America to the Middle East to Asia.
Licensing’s Complexities: Ensuring Brand Standards and Partner Investment
But creating a successful licensing network is not easy, companies acknowledge.
“I don’t believe the licensing model works for most companies. Spring Air is quite unique in the bedding industry landscape and has been so successful because the licensees in our group all work together with a much larger picture in mind,” says Nick Bates, president and CEO of Spring Air International, based in Woburn, Massachusetts. The company has 14 domestic licensees across the United States and 18 international licensees selling its brands across 71 countries.
Licensing arrangements can have significant downsides. For instance, licensees may not be as committed to the licensed brands as they are to their own brands.
“It can be a challenge to find partners that are invested in growing the brand and that aren’t going to take a ‘and we have this, too’ approach to the brand,” says Englander’s Paige.
Another challenge for licensors: Licensees may lose enthusiasm for a brand over time, and it can be difficult for licensors to enforce brand standards.
Restonic’s Tokarz notes that a key challenge for licensors is maintaining brand consistency, including “keeping specs, quality and brand voice uniform across regions.”
The sheer complexity of trying to coordinate “materials, testing and compliance in multiple markets” and overseeing the “innovation cadence” of “rolling out new technologies across many individually owned and operated factories,” is also difficult, Tokarz says.
Refining the Model: Focusing Licensing Efforts on International Expansion
With such difficulties in mind, some bedding companies have honed their models by operating domestic plants themselves and limiting licensing deals to international partners, where it’s more common to allow licensees greater flexibility in product design to match the tastes of local markets across the globe.
That’s been the case with North Brunswick, New Jersey-based Bedding Industries of America, which licenses several brands, including Eastman House, Eclipse, Hemingway and Van Vorst. Over the past several years, CEO Stuart Carlitz has shifted the company away from a broad stable of domestic licensees. (See page 35 for an article on Bed Quarter, the Eclipse licensee in Saudi Arabia, opening a new Eclipse store in Riyadh.)
Instead, BIA is focused on three company-owned factories in California, Illinois and New Jersey, as well as a plant in Texas that produces the Saatva brand. BIA now maintains just three licensing partnerships in the United States with long-time partners.
Globally, BIA has about 40 licensees, finding particular success in English-speaking countries and in regions that covet U.S. brands, like Asia and South and Central America.
Carlitz says BIA has sometimes found it difficult to control brand standards among domestic licensees, who are often entrepreneurial, independent-minded businesses. But that is less of an issue among international licensees, as they naturally need more leeway to tweak products to appeal to the tastes of consumers in their parts of the world.
David Binke, CEO of Avondale, Arizona-based King Koil, says he led that company’s shift from a domestic licensing model to a company-owned factory model several years ago “because I believe that is the best platform to serve customers.”
“We can ensure consistent quality and service to all customers as a result,” he says. “Further, our strategic plan included migration from modest-priced goods to luxury mattresses, which further validated this move.”
There is one exception within King Koil’s new business model: The company has maintained its long-term licensing deal with Blue Bell Mattress in East Windsor, Connecticut, which Binke calls “more of a strategic partnership than a traditional license.”
“We are very comfortable with their approach to quality and customer service, which makes this carve-out very successful,” he says.
While shifting away from domestic licensees, King Koil remains committed to international partnerships. It has 20 partners worldwide, which produce and supply King Koil products in more than 75 countries.
“Our licensing partners around the world are all very sophisticated manufacturers who run fully integrated operations,” Binke says. “Most also are retailers, so they are supplying their own stores, as well.”
So far, Binke says, the shift in King Koil’s business model has been “very, very successful for our company, for our retail partners and for our strategic partners.”
Kingsdown also focuses its mattress licensing efforts on international partners, although it does license its BedMatch diagnostic technology to both domestic and international retailers, including Dreams UK, which has placed BedMatch in more than 200 stores throughout the United Kingdom.
The Mebane, North Carolina-based company has licensing deals with bedding makers and retailers in 32 countries on five continents, with especially strong presences in China and Australia, says Frank Hood, Kingsdown CEO.
“On the international front, licensing enables Kingsdown to capitalize on rapid expansion opportunities in countries or regions where we have not had a major presence historically,” Hood says. “Collaborating with other manufacturers around the globe gives us the opportunity to quickly enter a market with a partner that knows their market and their prospective customers.”
Finding the Right Fit: Essential Qualities in a Bedding Licensee
Mattress companies that license their brands are continually scouting for new licensing partners.
What do they look for in a licensee? Like those seeking romantic partners, the list of “must-have” qualities is often long.
Restonic wants them to exhibit “manufacturing excellence,” demonstrate “a track record with key market retailers” and share Restonic’s “commitment to craftsmanship, service and long-term growth,” Tokarz says. She also wants them to share “an investment mindset” and a “willingness to build hero floor models, train RSAs and uphold brand standards.”
Binke says King Koil seeks “quality manufacturers with market leadership positions (and) with experienced mattress industry executives in the areas of sales, marketing, operations and design.”
“As a part of our process,” Binke adds, “we also spend a significant amount of time discussing a shared vision of King Koil as an ultra-premium brand in their market.”
Knowing that one of the challenges of managing licensing deals is ensuring that “licensees keep their commitments in terms of brand development, store or door expansion, and customer acquisition,” Hood says Kingsdown has “always been very discriminating regarding potential partnerships.”
“Choosing from the many qualified licensee inquiries can be quite a challenge,” Hood says. “In the end, we select licensing partners based on their ability to embrace and adopt our brand mantra and become part of Kingsdown family.”
For its part, Spring Air seeks “privately held and operated facilities that operate as small businesses, with deep-rooted networks in their communities,” Bates says.
“What drives Spring Air is that although we have grown into a top 20 bedding manufacturer with global reach, we really are a small business at heart,” Bates adds. “Everyone on the team lives and breathes Spring Air and we want our licensees to feel the same about their businesses — and that ensures we can both thrive.”
With a host of companies closing around the globe during the Covid-19 pandemic and the industry facing a prolonged downturn in consumer demand, Carlitz says he looks for “production capacity, commitment and financial wherewithal,” when vetting potential licensing partners.
Benefits for Licensees: Access to Innovation, Branding, and Marketing Expertise
For their part, bedding companies offer their licensees significant benefits, from product development to marketing support.
“King Koil provides our international licensees with many things to make their businesses more successful. Most important is our innovative design and product development team. There is no better designer in the mattress industry today than David Long (executive vice president of innovation and marketing),” Binke says. “It all starts with his vision for a product, and then all the innovative materials and contemporary design he brings to the final iteration.”
High-quality products, supported by branding materials and point-of-sale tools, help “King Koil products quickly become popular bestsellers and that means higher margins for our international licensees and their retail partners,” Binke adds.
Mathes says that Therapedic’s focus “on brand development and brand building” and its international reach enables its “licensees to be a part of something much bigger than the footprint they have on their own.”
From a practical standpoint, “we handle marketing, advertising, graphics and customer service at the overarching brand level,” Mathes says. “And we function as the boutique marketing agency for the licensee in regard to items needed at the retail level.”
Regular face-to-face meetings with licensees are key to successful partnerships, Hood says. So is “providing marketing insights and creative support from our production and design experts, along with social media content development and participation in domestic and international trade shows,” Hood adds.
Bates attributes Spring Air’s success with the licensing model, in part, to how Spring Air encourages cooperation and coordination among its licensees, particularly among its domestic partners.
“Several years ago, we formed a number of licensee committees to focus on the core areas of product design, marketing and quality,” Bates says. “We meet quarterly as a group, and then once a year, the senior leadership of all the domestic licensees convene for an annual manufacturing summit, which is really a high-level strategy meeting with a focus on sharing best practices in production, efficiency and standards throughout the organization. The summit agenda varies from year to year, but typically includes team-building exercises, plant tours, product presentations and intense discussions on go-to-market strategies.”
“I believe our approach works,” Bates continues, “because the group is made up of 14 of the best minds in the bedding business, who are all working toward a common goal: growing our brand and moving the business into the future.”
Carlitz notes that as BIA has invested in its company-owned factories in the United States, including a California facility that opened in 2021, it has built an internal infrastructure of services, products and abilities that allows the company to better support international licensees. “As we’ve grown,” he says, “we’ve been able to offer that much more to our international partners.”
