For obvious reasons many not so famous brands have problems finding licensees. Often driven by greed the owner or agency turns to retailers and signs a DTR license.
Why is it wrong?
1.
By nature, distribution is almost completely limited to the retailer/licensee. That goes directly against the brand rule of availability.
2. The consumer will receive the brand extension as a private label offering. At least in their mind, the brand changed hands.
3.
If something bad happens to the license or licensee, the brand looses both, manufacturing AND distribution. The product disappears. And it is very unlikely that any manufacturer or retailer will pick up the license.
Putting all your eggs into one basket may bring short term success. In the long term, and that is what sensitive brand owners focus upon, DTR licenses are most likely to fail.