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My favourite moments in the Den this week related to Samantha Gore and her proto-type electric curtain-drawer. I'd like to devote my blog to her product (which is deeply unconvincing) and her tenacious character (which is fantastically appealing).

But how can I talk about such matters when this week's show put into full public view something that threatens the very existence of Dragons' Den itself?

Evan will write weekly updates of Den activity throughout the 2009 series.

It has surfaced before, but made its latest appearance at the end of the encounter between the Dragons and Peter Neath and Ian Worton.

They had come in looking for a £120,000 for 15% of Grillstream. Their product was a simple oven or barbecue grill, niftily designed to catch any fat which oozes from sausages or the like.

They described it as "revolutionary technology" (the Den is never a place to avoid overstatement) and the Dragons did see quite a bit of merit in it.

Peter Jones made more than one reference to the well-known American boxer, George Foreman, who has made as much money as Peter Jones ever has, simply by endorsing a particular grill on TV.

Unfortunately for Ian and Peter, the Dragons felt they had other fish to fry and couldn't get quite excited enough to invest in the grill.

Except Theo.

Theo held on until after the Dragons had exited and he was sorely tempted to invest.

And that meant we almost had the makings of classic Dragons' Den. A last minute change of fortune - four dragons out and the remaining one chooses to seize victory from the jaws of defeat and rescues the pitch.

But it wasn't to be. This is where that dark threat to Dragons' Den suddenly emerged.

It's called licensing.

Theo realised that Ian and Peter did not need the £120,000; they did not need to go into grill production; they did not need to create infomercials or point of sale displays. They did not need to go to trade shows.

Instead, all they had to do was to license the idea to another company that is already set up to do all those things – preferably a company in the business of selling grills, ovens or barbecues of some kind. That company could exploit the Grillstream innovation, and pay a fee for the privilege of doing so.

It's obviously better for both sides. Ian and Peter don't need to work, they just need to collect the fees. And the grill professionals are always likely to be better than Ian and Peter at making and selling grills anyway.

Once you accept that licensing is the best route, there is no more to discuss. There's no need for an investment. On this occasion, Ian and Peter made a valiant attempt to explain how they could use £120,000 anyway but the Dragons just laughed.

Theo turned them down and they left the Den with nothing.

You can see why licensing threatens the existence of Dragons' Den.

If the logic of it is accepted, you can surely apply it to almost any product invented by anyone. And if licensing works, why would anyone ever want to face the Dragons? They would instead be going off to face their potential license partners.

There would be no more Ian and Peter in the Den, and certainly no more Samantha Gore. Her curtain-drawing proto-type would be in the hands of an electric curtain company.

It would be curtains for Dragons' Den. The end of Wednesday nights on ´óÏó´«Ã½2 for that matter. A dark threat indeed.

But fear not. It hasn't happened so far and licensing has hardly been kept secret. The Dragons and many entrepreneurs think about it routinely, and former Dragon Richard Farleigh (from series 3 and 4) was always very keen on the idea.

So why has it not taken over?

It is not because it lacks a compelling logic. Licensing exemplifies the sensible business principle that you should do what you do best. And generally, inventors are best at inventing, not at exploiting inventions.

The problem with it is that if it is hard for entrepreneurs to negotiate a fair deal with the Dragons, it is often even harder for them to strike one with a company that would otherwise be their competitor. Enormously complicated conflicts can arise - it's hard to establish exactly what value each party brings to the deal. The room for argument is infinite.

And the other problem is that in order to sell a license to another company, entrepreneurs have to reveal everything there is to know about their product before the deal is signed. It is an uncomfortable thing to do.

Which is why canny entrepreneurs try to build their own business into a credible form before they try to peddle their wares to others.

You need to make case by case judgements on how far to go in building the business, and also whether it makes sense to license the product or to keep it and then sell the company all in one piece. Sometimes you will want to reach a deal early, sometimes it will be late, sometimes it will be never.

On questions of that kind, the Dragons can advise. And until you license or sell your invention, they can invest. Thank goodness. There is a role for them.

The Den is safe.

Last updated: 19 August 2009