8 Important Things to Look for in a Licensing Agreement

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 4,123 reviews

Jump to Section

Need help with a Licensing Agreement?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

A licensing agreement is a written contract between two parties, a licensor and a licensee, that gives permission, under certain conditions, to use another party’s property, like a brand, patent, or trademark.

The licensor benefits from the relationship, too, in the form of royalties; the revenue generated from a licensing agreement.

Licensing agreements can take many forms, including:

Since licensing agreements protect property, scrutiny of any agreement by a professional lawyer is worthwhile. Here are 8 important things to look for in a licensing agreement.

1. Ownership

The most important thing to establish is your ownership over anything you are trying to secure a licensing agreement for. For example, in the case of a trademark, you want to ensure it’s already registered in your name.

In that same vein, you must also ensure you are prepared to defend your ownership against claims or disputes. Again, an excellent way to stay prepared is to keep any documentation or evidence of ownership accessible but protected.

Here is an article with examples of licensing agreements.

2. Performance Requirements

Performance requirements are sets of stipulations that ensure the original entity’s name is not tarnished and that the brand's standards are kept intact.

For Holiday Inn, their standard is all about keeping their properties well-maintained. They make regular inspections at licensee hotels to ensure hotel owners keep up with the brand standard. If the licensee hotels are not meeting an acceptable standard, they could lose their licensing agreement.

Here is an article about three common types of licensing agreements.

3. Exclusivity Clauses

An exclusivity clause or an exclusivity agreement is added to license agreements, in part, to protect their market.

In the case of the Holiday Inn, putting another hotel on the next block of an existing hotel would be counterintuitive. One hotel would just suck business from the other. Under exclusive exclusivity clauses, territory restrictions can protect the market territories around their licensee businesses.

Here is an article about the risks of being a licensee.

Meet some lawyers on our platform

Jose P.

1 project on CC
View Profile

Ryenne S.

143 projects on CC
View Profile

Benjamin E.

46 projects on CC
View Profile

Kelvin R.

11 projects on CC
View Profile

4. Affiliates or Sub-Distributors

If an affiliate or sub-distributor would be considered in the arrangement, it must be outlined in the license agreement. For example, a subsidiary relationship would allow the licensee to permit a third party to use, or sub-distribute, their property.

For their protection, savvy licensors should ensure expectations of this nature are detailed in the licensing agreement before signing.

Here is an article about the 25% rule for royalties.

5. Termination Clauses

A termination clause or a contract termination agreement is included in nearly every licensing agreement, and for a good reason. Licensors need to have the flexibility to cut ties easily if the licensee isn’t holding up their end.

On the other end of the spectrum, if you are looking to be a licensee, consider the implications if you find out the product you agree to sell isn’t a good product after all. It is important to outline agreed-upon exit plans for either party in this section.

Here is an article about what a termination clause should include.

6. Product Liability

The product liability portion of the license agreement covers which party is penalized if the “use, consumption, storage or transportation of the product cause[s] harm.” If you are looking into a licensee opportunity, make sure the product is something you want to put your name on.

Here is an article about whether licensing an invention is a good idea.

7. Length of the Relationship

The length of the relationship is another part of a licensing agreement you should be sure to review. It is usually measured in years against a baseline or effective date. A two- to three-year contract is common.

Here is an article where you can find out if you are using the right kind of licensing agreement.

8. Payments and Royalties

The section of the licensing agreement covering payments and royalties outlines how and when a licensee will pay the licensor to use their property. It is important to flesh this part out at the beginning, as this will set the tone for the entire agreement.

Most licensing agreements define royalties as a percent of sales or a flat payment per unit.

With licensing agreements, the devil is truly in the details, and you want to ensure those details are handled by a seasoned lawyer.

Post a project in ContractsCounsel’s marketplace to receive flat fee bids from lawyers for your project. All lawyers have been vetted by our team and peer-reviewed by our customers for you to explore before hiring.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

Jo Ann J. on ContractsCounsel
View Jo Ann
5.0 (6)
Member Since:
February 23, 2021

Jo Ann J.

Partner
Free Consultation
Boston, MA
27 Yrs Experience
Licensed in MA
Suffolk Universtiy Law School

Jo Ann has been practicing for over 20 years, working primarily with high growth companies from inception through exit and all points in between. She is skilled in Mergers & Acquisitions, Contractual Agreements (including founders agreements, voting agreements, licensing agreements, terms of service, privacy policies, stockholder agreements, operating agreements, equity incentive plans, employment agreements, vendor agreements and other commercial agreements), Corporate Governance and Due Diligence.

Don G. on ContractsCounsel
View Don
5.0 (10)
Member Since:
March 1, 2021

Don G.

Attorney at law
Free Consultation
Lafayette, LA
22 Yrs Experience
Licensed in TX
Texas Tech School of Law

Texas licensed attorney specializing for 20 years in Business and Contract law. My services include General Business Law Advisement; Contract Review and Drafting; Legal Research and Writing, including Motion Practice; Business Formation; Article or Instructive Writing; and more. For more insight into my skills and experience, please feel free to visit my LinkedIn profile or contact me with any questions.

Benjamin W. on ContractsCounsel
View Benjamin
5.0 (26)
Member Since:
March 12, 2021

Benjamin W.

Founder
Free Consultation
Los Angeles, CA
8 Yrs Experience
Licensed in CA
UCLA School of Law

I am a California-barred attorney specializing in business contracting needs. My areas of expertise include contract law, corporate formation, employment law, including independent contractor compliance, regulatory compliance and licensing, and general corporate law. I truly enjoy getting to know my clients, whether they are big businesses, small start-ups looking to launch, or individuals needing legal guidance. Some of my recent projects include: -drafting business purchase and sale agreements -drafting independent contractor agreements -creating influencer agreements -creating compliance policies and procedures for businesses in highly regulated industries -drafting service contracts -advising on CA legality of hiring gig workers including effects of Prop 22 and AB5 -forming LLCs -drafting terms of service and privacy policies -reviewing employment contracts I received my JD from UCLA School of Law and have been practicing for over five years in this area. I’m an avid reader and writer and believe those skills have served me well in my practice. I also complete continuing education courses regularly to ensure I am up-to-date on best practices for my clients. I pride myself on providing useful and accurate legal advice without complex and confusing jargon. I look forward to learning about your specific needs and helping you to accomplish your goals. Please reach out to learn more about my process and see if we are a good fit!

Rebecca L. on ContractsCounsel
View Rebecca
5.0 (2)
Member Since:
April 6, 2021

Rebecca L.

Attorney/Owner
Free Consultation
San Diego, CA
12 Yrs Experience
Licensed in CA, DC, VA
New England School of Law

I absolutely love helping my clients buy their first home, sell their starters, upgrade to their next big adventure, or transition to their next phase of life. The confidence my clients have going into a transaction and through the whole process is one of the most rewarding aspects of practicing this type of law. My very first class in law school was property law, and let me tell you, this was like nothing I’d ever experienced. I remember vividly cracking open that big red book and staring at the pages not having the faintest idea what I was actually reading. Despite those initial scary moments, I grew to love property law. My obsession with real estate law was solidified when I was working in Virginia at a law firm outside DC. I ran the settlement (escrow) department and learned the ins and outs of transactions and the unique needs of the parties. My husband and I bought our first home in Virginia in 2012 and despite being an attorney, there was so much we didn’t know, especially when it came to our HOA and our mortgage. Our real estate agent was a wonderful resource for finding our home and negotiating some of the key terms, but there was something missing in the process. I’ve spent the last 10 years helping those who were in the same situation we were in better understand the process.

Jeremiah C. on ContractsCounsel
View Jeremiah
4.9 (18)
Member Since:
March 5, 2021

Jeremiah C.

Partner/Attorney at Law
Free Consultation
Houston, TX
15 Yrs Experience
Licensed in NV, TX
Thomas Jefferson

Creative, results driven business & technology executive with 24 years of experience (13+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits. I provide professional business and legal consulting. Throughout my career I've represented a number large corporations (including some of the top Fortune 500 companies) but the vast majority of my clients these days are startups and small businesses. Having represented hundreds of successful crowdfunded startups, I'm one of the most well known attorneys for startups seeking CF funds. My engagements often include legal consultation & advisory roles, drafting of NDAs, TOS & Privacy Policies, contracts and corporate law, business strategy advice & consulting, in-house counsel, Founder & entrepreneur guidance and other roles as needed by my clients. I hold a Juris Doctor degree with a focus on Business/Corporate Law, a Master of Business Administration degree in Entrepreneurship, A Master of Education degree and dual Bachelor of Science degrees. I look forward to working with any parties that have a need for my skill sets.

Meghan P. on ContractsCounsel
View Meghan
4.8 (5)
Member Since:
February 15, 2021

Meghan P.

Attorney
Free Consultation
Denver
5 Yrs Experience
Licensed in CA
University of Dayton

I am a licensed attorney and a member of the California Bar. I graduated from the University of Dayton School of Law's Program in Law and Technology. I love IP, tech transfers, licensing, and how the internet and developing technology is changing the legal landscape. I've interned at both corporations and boutique firms, and I've taken extensive specialized classes in intellectual property and technology law.

Charlotte L. on ContractsCounsel
View Charlotte
4.6 (2)
Member Since:
February 26, 2021

Charlotte L.

Self-Employed Legal Consultant
Free Consultation
Arlington, VA
9 Yrs Experience
Licensed in DC, VA
University of Virginia School of Law

I hold a B.S. in Accounting and a B.A. in Philosophy from Virginia Tech (2009). I received my J.D. from the University of Virginia School of Law in 2012. I am an associate member of the Virginia Bar and an active member of the DC bar. Currently, I am working as a self-employed legal consultant and attorney. Primarily my clients are start-up companies for which I perform various types of legal work, including negotiating and drafting settlement, preparing operating agreements and partnership agreements, assisting in moving companies to incorporate in new states and setting up companies to become registered in a state, assisting with employment matters, drafting non-disclosure agreements, assisting with private placement offerings, and researching issues on intellectual property, local regulations, privacy laws, corporate governance, and many other facets of the law, as the need arises. I have previously practiced as an attorney at a small DC securities law firm and worked at Deloitte Financial Advisory Services LLC. My work experience is dynamic and includes many short-term and long term experience that span across areas such as maintaining my own blog, freelance writing, and dog walking. My diverse background has provided me with a stong skill set that can be easily adapted for new areas of work and indicates my ability to quickly learn for a wide array of clients.

Adam B. on ContractsCounsel
View Adam
Member Since:
March 6, 2021

Adam B.

Managing Partner
Free Consultation
San Mateo, California
25 Yrs Experience
Licensed in CA
McGeorge School of Law

Seasoned technology lawyer with 22+ years of experience working with the hottest start-ups through IPO and Fortune 50. My focus is primarily technology transactions with an emphasis on SaaS and Privacy, but I also provide GC services for more active clients.

Ema T. on ContractsCounsel
View Ema
Member Since:
March 13, 2021

Ema T.

Contract and IP Attorney
Free Consultation
New York, NY
5 Yrs Experience
Licensed in NY
Chicago Kent

I am a NY licensed attorney experienced in business contracts, agreements, waivers and more, corporate law, and trademark registration. My office is a sole member Law firm therefore, I Take pride in giving every client my direct attention and focus. I focus on getting the job done fast while maintaining high standards.

David B. on ContractsCounsel
View David
Member Since:
April 2, 2021

David B.

Attorney
Free Consultation
Trussville, Alabama
27 Yrs Experience
Licensed in AL
Birmingham School of Law

A twenty-five year attorney and certified mediator native to the Birmingham, Alabama area.

Samantha B. on ContractsCounsel
View Samantha
Member Since:
April 16, 2021

Samantha B.

Principal and Founder
Free Consultation
Chicago
9 Yrs Experience
Licensed in FL, IL
Ave Maria School of Law

Samantha has focused her career on developing and implementing customized compliance programs for SEC, CFTC, and FINRA regulated organizations. She has worked with over 100 investment advisers, alternative asset managers (private equity funds, hedge funds, real estate funds, venture capital funds, etc.), and broker-dealers, with assets under management ranging from several hundred million to several billion dollars. Samantha has held roles such as Chief Compliance Officer and Interim Chief Compliance Officer for SEC-registered investment advisory firms, “Of Counsel” for law firms, and has worked for various securities compliance consulting firms. Samantha founded Coast to Coast Compliance to make a meaningful impact on clients’ businesses overall, by enhancing or otherwise creating an exceptional and customized compliance program and cultivating a strong culture of compliance. Coast to Coast Compliance provides proactive, comprehensive, and independent compliance solutions, focusing primarily on project-based deliverables and various ongoing compliance pain points for investment advisers, broker-dealers, and other financial services firms.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call