Many small businesses own valuable intellectual property without realising it: training materials, courses, designs, photographs, software, methods, templates, recipes or a recognised brand. Licensing allows other businesses to use this intellectual property in exchange for fees or royalties. It can generate income without requiring additional delivery time, extending the reach of your expertise far beyond your own capacity.
This article provides general information. Licensing involves legal rights that vary by country; seek qualified legal advice before entering licensing agreements.
Identify what you could license
Review what your business has created: content, systems, designs, tools or methods that others might value. Consider which assets are distinctive, proven and useful to other businesses or markets you do not serve directly.
Understand ownership
Before licensing, confirm that your business owns the intellectual property or has the right to license it. Work created by employees, contractors or partners may involve different ownership rules. Clarify ownership in writing where necessary.
Choose the licensing model
Licences can take different forms: a one-time fee, recurring payments, royalties based on sales or usage, or a combination. Consider which model reflects the value of the asset and how the licensee will use it.
Define the scope
A licence should specify what can be used, how, where and for how long. Scope may include territories, industries, channels, formats and whether the licence is exclusive or non-exclusive. Narrow scope protects future opportunities.
Protect quality
When others use your methods, content or brand, their quality affects your reputation. Include standards, approval rights, training requirements or usage guidelines in the agreement.
Scope may include territories, industries, channels, formats and whether the licence is exclusive or non-exclusive.
Consider exclusivity carefully
Exclusive licences can command higher fees but prevent you from licensing to others in the same scope. Link exclusivity to performance targets and review periods where possible.
Monitor usage
Agree how usage will be reported and how payments will be calculated. Regular reporting allows you to verify that the licence is being used as agreed.
Plan for the end
Agreements should explain what happens when the licence ends: whether the licensee must stop using materials, how remaining stock or content is handled and how customers are transitioned.
A practical tool: the licensing opportunity list
List each asset your business has created, who might value it, how they would use it, the potential licensing model and the risks to your reputation or core business. Rank the assets by value and ease of licensing. Start with one well-defined asset and a single trusted licensee.
Questions before licensing
Ask: Do we clearly own this asset? Would licensing compete with our own sales? How will quality be protected? How will we know how much the licensee uses it? What happens if the licensee damages our reputation? Clear answers, confirmed with legal advice, protect both the asset and the business.
Licensing and your brand
Licensing a brand, rather than content or methods, carries particular reputational risk, because customers associate the licensee's behaviour with your name. Brand licensing usually requires stronger quality controls, approval rights and careful partner selection than licensing materials or tools.
Common mistakes
Businesses often license intellectual property without confirming ownership, grant broad or exclusive rights too cheaply, fail to protect quality, lack reporting arrangements or forget to plan for the end of the agreement. Others undervalue their assets. Clear scope, quality controls and legal advice make licensing a valuable source of income.
An example in practice
A small training company developed a successful workshop programme for customer service teams. Instead of hiring more trainers to expand nationally, it licensed the programme to two regional training providers. The licence included trainer certification, usage reports, quality reviews and a royalty on each workshop delivered. The company earned additional income while protecting the programme's standards and reputation.