Licensing

Definition

Licensing in the context of global business is a contractual agreement whereby a company (licensor) allows another company (licensee) to use its intellectual property, brand, or product specifications in exchange for a fee or royalty. This enables companies to expand their brand and products into new markets without directly investing in manufacturing facilities or distribution networks.

Related terms

Intellectual Property: Legal rights granted to individuals or companies over their creations, such as inventions, literary and artistic works, designs, and symbols used in commerce.

Royalty Fee: A payment made by one party (the licensee) to another (the licensor) for the ongoing use of an asset, usually intellectual property.

Franchising: A method of business expansion where the franchisor grants the franchisee the right to use its trademark or trade-name as well as certain business systems and processes, to produce and market a good or service according to certain specifications