In an article here, Ian D. McClure, writes about the risk of brand dilution through a license, how to evaluate that risk and how the risk should be a factor in calculating royalties.
In our opinion the risk of failure of the (licensed) new product(s) and the resulting “damage to goodwill” cannot be calculated.
About 90% of all new product launches fail. Failure is the norm, not the exception. Even big companies with the best reputation and all the market power fail. Do you remember Burn, an energy drink The Coca Cola Company introduced? It was backed with all of the might of the global market leader in carbonated drinks. And it tanked.
In general, licensed product launches are more successful.
And consumers allow brands to make mistakes. The Harley Davidson perfume or their cake decorations were bad ideas. They failed miserably. Did it hurt Harley Davidson? Yes, it did. Did it damage the goodwill with consumers? No, consumers are forgiving, if you do not repeat your mistakes over and over again.