Faraday Future and Grow Fandor Forge Exclusive Strategic Licensing Collaboration, a Potential New Growth Driver

Rhea-AI Summary

Faraday Future (Nasdaq: FFIE) announced a strategic licensing agreement with Grow Fandor for ecosystem products. As FF's exclusive licensee, Grow Fandor will manage design, development, sales, and operations for products bearing FF and Faraday X (FX) brands. The deal includes a $250,000 annual base license fee and royalty fees of either 50% of annual net profit or 5% of net sales revenue, whichever is higher. FF owns 10% of Grow Fandor's shares and retains approval rights for trademark usage. The collaboration requires no resource contribution from FF while potentially creating a new revenue stream.

Positive

• Secured $250,000 upfront annual license fee with no resource investment required
• Revenue sharing agreement of 50% of net profits or 5% of net sales, whichever is higher
• 10% ownership stake in Grow Fandor provides additional financial interest
• New revenue stream diversification beyond vehicle manufacturing
• Zero operational costs or resource requirements for FF

Negative

• Revenue potential remains uncertain and dependent on Grow Fandor's execution
• Brand reputation risks if product quality doesn't meet standards

Insights

Financial Analyst

This licensing deal offers minimal financial impact for FFIE given their $21M market cap and dire financial situation. The initial $250,000 license fee and future royalties of 5% of sales or 50% of profits provide negligible revenue compared to the capital needed for their core EV business. While the deal requires no resource commitment from FFIE, the company's 10% ownership in Grow Fandor through YT Jia's share transfer adds complexity to an already troubled operation. The market for automotive branded merchandise is unlikely to meaningfully impact FFIE's financial trajectory given their fundamental challenges in vehicle production and liquidity.

• FF has received the initial $250,000 annual license fee.
• The anticipated economic benefits for FF from this collaboration include a royalty fee equal to the greater of (a) 50% of the annual net profit from FF and FX ecosystem products and (b) 5% of net sales revenue from all relevant brand ecosystem products.
• FF will not be required to contribute any resources for development of branded products. 

LOS ANGELES--(BUSINESS WIRE)-- Faraday Future Intelligent Electric Inc. (Nasdaq: FFIE) (“FF”, “Faraday Future”, or the “Company”), a California-based global shared intelligent electric mobility ecosystem company, today announced a comprehensive strategic licensing agreement with Grow Fandor, an IP commercialization company. As FF’s exclusive licensee for ecosystem products, Grow Fandor will manage the design, development, sales, and operations for certain ecosystem products bearing the FF and Faraday X (FX) brands. This collaboration has the potential to become a new growth driver for FF.

Under the terms of the licensing agreement, Grow Fandor has exclusive licensing rights as the only third-party allowed to use the FF and FX brands and marks during the contract term. This right includes, but is not limited to, categories like apparel, automotive accessories, home goods, and personal care products. FF will not be required to contribute any resources for development of branded products. Furthermore, FF will financially benefit from an annual license fee and additional licensing royalties. Grow Fandor will fully assume responsibility for all tasks related to these products, encompassing research and development, supply chain management, sales, and after-sales services.

The anticipated economic benefits for FF from this collaboration include: (1) a royalty fee, payable quarterly, calculated as the greater of: (a) 50% of the annual net profit from FF and FX ecosystem products, and (b) 5% of net sales revenue from all relevant brand ecosystem products, payable quarterly (whichever amount is higher will be the final royalty fee for that year); and (2) a $250,000 annual base license fee. The initial annual license fee has been paid and received, and subsequent annual license fees will be payable within 30 days after each contract year.

FF retains approval rights for the use of its trademarks and the right to audit products bearing these marks, sales revenue, and the right to share sales, enabling and the ability of FF to sell ecosystem products through its own channels. Grow Fandor must secure written approval from FF before launching any product designs, advertisements, or announcements involving FF trademarks, ensuring FF’s control over its brand image.

Branded products have become a significant revenue source for many automotive companies, especially within the luxury and performance segments. FF has been actively exploring opportunities in this space, and with this new collaboration, it positions FF for growth and market expansion within this unique consumer products sector.

Previously, YT Jia gifted nearly 60% of his shares in Grow Fandor to FF, making FF a significant shareholder with 10% ownership of the company’s shares.

This strategic licensing agreement represents a new level of collaboration between the two companies, allowing FF to benefit from an additional revenue stream beyond vehicle manufacturing, without increased financial, labor, or other expenses. This business expansion not only diversifies FF’s revenue sources but could also enhance global brand recognition for both FF and FX.

“We are very pleased to establish a strategic collaboration with Grow Fandor for our ecosystem products. Grow Fandor’s commitment to supporting FF’s growth in this new area is invaluable, and we look forward to realizing the potential of this promising new business segment,” said Matthias Aydt, Global CEO of FF.

A spokesperson for Grow Fandor added, “We are honored to enter this strategic collaboration with FF. Grow Fandor is dedicated to maximizing the brand value of FF and FX. We believe this cooperation will drive a dynamic synergy between our companies, fostering mutual growth and success.”

ABOUT FARADAY FUTURE

Faraday Future is the pioneer of the Ultimate AI TechLuxury ultra spire market in the intelligent EV era, and the disruptor of the traditional ultra-luxury car civilization epitomized by Ferrari and Maybach. FF is not just an EV Company, but also a software-driven intelligent internet Company. Ultimately FF aims to become a User Company by offering a shared intelligent mobility ecosystem. FF remains dedicated to advancing electric vehicle technology to meet the evolving needs and preferences of users worldwide, driven by a pursuit of intelligent and AI-driven mobility.

ABOUT GROW FANDOR

Grow Fandor is a pioneering IP commercialization company that leverages a business IP matrix of top entrepreneurs and celebrities to transform content and commerce across industries. Founded by YT Jia and partners, this venture merges robust technological platforms with high-quality international supply chains to innovate in video and live-stream e-commerce, brand derivative commercialization, and knowledge empowerment. With a strategic emphasis on bridging market gaps between China and the U.S., Grow Fandor not only aims to introduce advanced business models and premium international products across borders but also fosters cross-cultural business growth and collaboration. Its mission is to empower driven individuals and visionary entrepreneurs with tools that enhance their professional and personal lives, thereby contributing to global economic development and innovation.

FORWARD LOOKING STATEMENTS

This press release includes “forward looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements, which include statements regarding the licensing agreement with and equity interest in Grow Fandor, involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.

Important factors, among others, that may affect actual results or outcomes include, among others: the ability of Grow Fandor to successfully market ecosystem products with the FF and FX marks; the Company’s interest in Grow Fandor lacks antidilution protection and the Company has no ability to prohibit or otherwise restrict material dilution of its investment interest in Grow Fandor. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of the Company’s Form 10-K filed with the SEC on May 28, 2024, as amended on May 30, 2024, and June 24, 2024, as updated by the “Risk Factors” section of the Company’s first quarter 2024 Form 10-Q filed with the SEC on July 30, 2024, and other documents filed by the Company from time to time with the SEC.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241113242127/en/

Investors (English): ir@faradayfuture.com

Investors (Chinese): cn-ir@faradayfuture.com

Media: john.schilling@ff.com

Source: Faraday Future Intelligent Electric Inc.

FAQ

What are the financial terms of FFIE's licensing agreement with Grow Fandor?

The agreement includes a $250,000 annual base license fee and royalty fees of either 50% of annual net profit or 5% of net sales revenue, whichever is higher.

What percentage of Grow Fandor does FFIE own?

Faraday Future owns 10% of Grow Fandor's shares.

What product categories are included in FFIE's licensing agreement?

The agreement covers categories including apparel, automotive accessories, home goods, and personal care products bearing FF and FX brands.

Does FFIE need to invest resources in the Grow Fandor partnership?

No, FF will not be required to contribute any resources for the development of branded products.