Please read PART ONE too!
Licensing is a funny thing. Many artists have been lead to believe that its a magic word and will make them rich and famous immediately because they see So and Sos art all over. Thats wrong. No one product or contract will do either for you.
1. Trust your instincts and dont let jealousy get in the way. Just because you see someone elses art on a product doesnt mean you know its actually a good deal for them.
2. There are two aspects to product licensing: royalties and exposure for your art. Ideally you want both and if you get neither its no use at all. You get only small percentage of what the product sells for wholesale (i.e half the price you see in stores). Dont let anyone tell you that licensing is going to make you rich OR that its just free advertising that you arent supposed to make any money from.