What is "Licensing Agreement" meaning?

A licensing agreement is a business contract in which the owner of intellectual property (the licensor) permits another party (the licensee) to use that property in exchange for compensation, often royalties or fees. These agreements are common in software, content creation, branding, and product manufacturing.

Example

"The company signed a licensing agreement to use the popular character design in their new game, paying a royalty for each sale."

How is "Licensing Agreement" used in business?

In business, licensing agreements allow companies to monetize their intellectual assets without selling them outright. They also let businesses expand their offerings or market reach by legally using someone else’s brand, technology, or content.

Pro Tip

Always clearly define the scope, duration, territory, and exclusivity in a licensing agreement to avoid legal conflicts down the line.

Related Terms

Intellectual Property, Royalty, Franchise, Trademark