Licensing for Small Businesses

Licensing for Small Businesses

Originally posted 2018-11-19 11:21:37


By Hollyn Randolph | Editor: Kristen Daly |

Licensing is a great way for businesses to expand their brand. When the decision to license is made, it is important to pay attention to the licensing agreement. Creating an effective licensing agreement requires some key components.

Licensing is a contractual right that allows businesses to control, manage and protect their intellectual property. An effective licensing agreement contains basic components but also allows for customization. It is important for a licensor to specifically state the terms and conditions of the license.

Licensing can be beneficial to both small and medium size fashion businesses. Not only can licensing add another stream of income but it may also expand a brand. Let’s say a business has a trademark. That trademark can be licensed to other companies in order to create a wide range of products from eye-glass wear to custom notebooks (think Kate Spade).  

A license is a contractual agreement that allows an IP rights holder (licensor) to gain profit from their rights by charging a user (licensee) for product use. There are a few components that are necessary to ensure that the agreement benefits both the licensor and the licensee. The first is the license scope. The license scope serves as the most important part of the agreement as it defines how and what the licensee will be allowed to use.

The second necessary component is revenue from the product. It is important that the agreement states what percentage each party will receive from sales. Forms of payment and when payment should be recieved may also be included.

Limitations on the licensors liability and non-disclosure of confidential information are also significant.

Other terms that may be included are duration of the agreement, as some licensing agreements are short-term while others are long-term, and a clause to state if the licensee has a right to modify and combine with other products.

Image Link:


We are happy to be of service to you

Welcome to AMD LAW Group!