What is a licence?

A licence is an agreed set of permissions allowing another person or business to use and profit from something you own.

You can either grant (give) a licence or sell it for a fee.

You can set the terms of a licence restricting it in a number of different ways including :

• time period (e.g. one year, five years)
• geographically (e.g. within the Greater London Area, within the US,)
• audiences (e.g. to schools, universities, over 70s)
• market segment (e.g. start-up businesses, museums and galleries)
• method/platform (e.g. bricks and mortar stores, eBay, Amazon)
• reward (e.g. one-off payment, annual fee, share of sales)
  and so on.

As the licensor, you can set the rules and shape the negotiations.

Let’s look at an example of a licence…

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You make a delicious healthy chocolate bar in the UK to your own recipe which is proving hugely popular with sales rocketing. But due to the restrictions on food imports, the high cost of shipping, distribution etc, you decide importing to the US is just too much faff, despite it being a great potential market. A way of tapping into the US market would be to work with a US-based manufacturer who would buy the licence from you to make, sell and distribute your product in the State.

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