ContractsCounsel Logo

A Helpful Guide to License Agreements

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 7,494 reviews
Home Blog A Helpful Guide to License Agreements

License Agreements: Key Elements You Need To Know

Licensing agreements are contracts between a licensor and a licensee. Through the agreement, the licensor gives the licensee the right to do one or more of the following: produce goods, sell goods, use a brand name or trademark, or use patented technology. Because there are numerous bases to cover, licensing agreements are fairly lengthy, but most will hit on the following key elements.

The Financial Arrangement

This is at the heart of the agreement, and with a lot riding on this particular element, you will want to be as clear as possible. Clarify how much the licensor will be paid per item sold, use of the trademark, etc., if the licensee must pay just to gain rights of use, and so on. This is where conflict is most likely to arise, so ensure this is unambiguous.

The Length of the Agreement

It is rare for a licensing agreement to continue indefinitely. In fact, setting it up in such a manner is pretty much guaranteed to cause problems. Instead, set a specific start and end date, or a renewal date. Most contract lawyers would also suggest setting a date by which the licensee must have the product hit the market, preventing the licensor from being trapped in an agreement that results in little to no money for them.

Quality Standards

For the licensor, the products offered by the licensee will reflect upon them and their business, and poor products don’t support a good image. Here, the quality standards that must be met should be specified. As an added level of protection, this element could also state that the licensor must sign off on all quality and brand decisions before any product hits the market.

Territory Limits

When the licensee is given permission to use the intellectual property of the licensor, there is the option to limit the territory in which they can sell. For example, the licensor might want an agreement in one region of the US with a specific licensee based on their deep connection there and wish to switch to another in a different part of the country. Any territory limits must be clearly outlined in the agreement.

Ownership of Improvements

In theory, the licensee could improve upon the product of the licensor. Should this happen, whose intellectual property are those improvements? It is an interesting question, and most likely, both parties will agree it is them. Stop the disagreement in advance by making it clear within the contract who will have ownership over these improvements.

Get Help from Vetted Contract Lawyers Near You

Your license agreement needs to be iron-clad and designed to protect your business interests. Rather than taking the risk of going DIY with online templates, turn to Contracts Counsel, a boutique marketplace that puts you in contact with contract lawyers who know your state and federal laws and are familiar with your industry. Protect your interests with

Meet some of our Lawyers

Jason H. on ContractsCounsel
View Jason
4.9 (6)
Member Since:
March 5, 2023

Jason H.

Managing Attorney
Free Consultation
Dallas, Texas
22 Yrs Experience
Licensed in TX, VA
Regent University, School of Law

Jason has been providing legal insight and business expertise since 2001. He is admitted to both the Virginia Bar and the Texas State Bar, and also proud of his membership to the Fellowship of Ministers and Churches. Having served many people, companies and organizations with legal and business needs, his peers and clients know him to be a high-performing and skilled attorney who genuinely cares about his clients. In addition to being a trusted legal advisor, he is a keen business advisor for executive leadership and senior leadership teams on corporate legal and regulatory matters. His personal mission is to take a genuine interest in his clients, and serve as a primary resource to them.

Gregory B. on ContractsCounsel
View Gregory
5.0 (72)
Member Since:
October 18, 2021

Gregory B.

Free Consultation
San Diego, CA
4 Yrs Experience
Licensed in CA
University of San Diego

I love contracts - and especially technology-related contracts written in PLAIN ENGLISH! I've worked extensively with intellectual property contracts, and specifically with IT contracts (SaaS, Master Subscriptions Agreements, Terms of Service, Privacy Policies, License Agreements, etc.), and I have built my own technology solutions that help to quickly and thoroughly draft, review and customize complex contracts.

Ted A. on ContractsCounsel
View Ted
4.9 (3)
Member Since:
August 10, 2023

Ted A.

Managing Attorney
Free Consultation
New York, New York
24 Yrs Experience
Licensed in NY
Yale Law School

Equity Investments, Agreements & Transactions | Securities & Lending | Corporate Governance | Complex Commercial Contracts | Outside General Counsel & Compliance

Michael S. on ContractsCounsel
View Michael
5.0 (4)
Member Since:
April 16, 2023

Michael S.

Managing Partner
Free Consultation
Los Angeles, California
28 Yrs Experience
Licensed in CA, NY
Harvard Law School

I began my career at "big law" firms, worked in-house for 14 years, and now have my own practice, providing big law quality at small firm rates. My practice focuses on strategic and commercial transactions, including M&A, preferred stock and common stock offerings, asset purchases and sales, joint ventures and strategic partnerships, stock option plans, master services agreements and SOWs, software development and license agreements, SaaS agreements, NDAs, employment and consulting agreements. I also manage corporate governance, advise boards and executives, and act as outside general counsel. I represent clients across the country and around the world.

Karen M. on ContractsCounsel
View Karen
Member Since:
April 14, 2023

Karen M.

Managing Member
Free Consultation
Atlanta, Georgia
24 Yrs Experience
Licensed in GA
University of North Carolina at Chapel Hill

Karen V. Mills is the founding member of the woman-owned boutique law firm Mills Law, LLC, based in Atlanta, Georgia, specializing in contracts, corporate transactional and business law.

Andrew M. on ContractsCounsel
View Andrew
Member Since:
April 17, 2023

Andrew M.

Free Consultation
Sarasota, Florida
8 Yrs Experience
Licensed in CO, NC, SC
University of Denver Sturm College of Law

Business Venture Law: Andrew Moore, Esq. focuses on solving modern business problems with common sense at affordable rates.

Lena K. on ContractsCounsel
View Lena
Member Since:
July 7, 2023

Lena K.

General Counsel
Free Consultation
New York
19 Yrs Experience
Licensed in NY
Yale Law School

Lena graduated from Yale Law School. She is a business savvy attorney with more than 15 years of experience advising C-level executives and Boards of Directors on a variety of legal matters. Most recently, she has served as General Counsel for a healthcare technology startup and a multinational E-commerce company. Previously, she had built a legal function for a public financial services company and served as sole legal counsel for a global E-commerce subsidiary of a multinational company. She has supported a wide range of matters including commercial and technology contracts, online terms and privacy policies, data privacy and security, employment law and severance agreements, intellectual property, SEC filings, regulatory compliance, real estate leases, advertising and marketing, and dispute resolution for companies ranging from startups to multinational multi-billion-dollar companies.

Find the best lawyer for your project

Browse Lawyers Now
Learn About Contracts
See More Contracts
other helpful articles

Need help with a Licensing Agreement?

Create a free project posting

Want to speak to someone?

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

Request a call

Find lawyers and attorneys by city