A licence is granted by one party to another party as part of an agreement between these parties. In the case of a government-issued licence, the licence is obtained by application. In the case of a private party, it is a particular contract, usually in writing (for example. B a lease or other contract). The simplest definition is “a licence is a promise not to file a complaint” because, with the exception of a marriage license (which grants only official recognition of the relationship between the two persons), a licence allows the party to engage in illegal activity and, subject to authorization, without the licence (p.B, driving or operating a broadcasting or television channel), or allowing the licensed party to do something that would violate the rights of the licensed company (e.g. B make copies of a copyrighted work) that could be sued without the license, the party granted, civilly, criminally or both. The bargaining power of both parties to a licensing agreement often depends on the nature of the product. For example, a film studio that would grant the image of a popular superhero to an action figure maker could have considerable bargaining power in this negotiation, as the manufacturer will likely benefit from such an agreement. The film studio therefore has the lever to take its business elsewhere if the manufacturer has cold feet.

If someone has a franchise, there may be a licensing agreement, and there may be several types of licenses within the franchise. For example, a McDonald`s franchise could include licenses for the use of the McDonald`s logo on products and packaging and another license for the manufacture of its patented processes or ingredients. Another important element of a licensing agreement defines the timing of the agreement. Many licensees insist on a strict marketing date for products that are granted to external manufacturers. Finally, it is not in the licensee`s interest to license a company that never markets the product. The licensing agreement also contains provisions relating to the duration of the contract, renewal options and termination terms. In a typical licensing agreement, the licensee undertakes to make intellectual property rights such as technology, brand name or licensee know-how available to the licensee. In exchange for the intellectual property of the licensee, the purchaser usually plays the donor a pre-feeding and/or a licence fee. A licence fee is an ongoing fee paid for the licensee`s right to use intellectual property. In the context of a pure licensing agreement, the licensee may, on its terms and under the common law, terminate the contract as it sees fit and without reason, unless it is linked to an interest or rendered irrevocable by contract.

An interest-related licence cannot be revoked by the licensee without liability and potential damage. In the event that a licence is related to an interest, the licensee must give the licensee a reasonable period of time to withdraw that interest from the property prior to termination. Since a licence does not confer any interest on the licensee, the licence is terminated in the event of the sale of the property and cannot be imposed on the new owners of that property. In addition, the death of the licensee or licensee will terminate the contract. Duration: Many licenses are valid for a specified period of time. This protects the licensee if the value of the license increases or if market conditions change. In addition, applicability is maintained by ensuring that no license goes beyond the duration of the contract. Most licensing agreements also deal with the issue of quality. For example, the licensee may enter into the contract conditions that require the purchaser to provide prototypes of the product, mockups of the packaging and even occasional samples for the duration of the contract.