Business Models
Licensing
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A commercial model in which a rights holder (the licensor) grants another party (the licensee) permission to use a proprietary asset, such as a patent, trademark or other intellectual property, as part of an agreement between them.
Facts
Core MechanismThe licensee pays the licensor royalty payments for the right to use the licensed asset, either as a lump sum paid upfront and independent of sales, or as a running royalty tied to how many licensed products the licensee actually sells. 1 Cross-Tradition Connections
Associated With
Franchising is defined by its own source article as involving the licensing of intellectual property and business-format knowhow, making it a specific commercial application of the licensing model rather than an unrelated concept.
Sources
1. Wikipedia, Licensing
WikipediaLead sectionQuote, Lead section
A license is granted by a party (licensor) to another party (licensee) as an element of an agreement between those parties.
1. Wikipedia, Licensing
WikipediaPatent licensing sectionQuote, Patent licensing section
Such payments are referred to as royalty payments and come primarily in two forms: lump sum or running royalty.
1. Wikipedia, Licensing
WikipediaTrademark licensing sectionQuote, Trademark licensing section
The first form demands a fee independent of sales and profits, the second type of license fee is dependent on the productivity of the licensee.
Wikipedia, Franchising
WikipediaAssociated With: Franchising, Lead sectionQuote, Associated With: Franchising, Lead section
It can involve the franchisor licensing some or part of its knowhow, procedures, intellectual property and other rights to sell its branded products
Open Questions (1 open question)
In what era did licensing emerge as a distinct commercial business model, rather than only a legal instrument?
Wikipedia's article on licensing defines the legal mechanism ('an official permission or permit to do, use, or own something') but does not address when licensing became a commercial revenue strategy in its own right, as opposed to a legal concept as old as property law itself.
What would resolve this A business-history source tracing licensing's development as a deliberate revenue strategy, for example through the earlier history of patent or trademark licensing, distinct from the general legal concept of a license and from franchising's own separately documented origin.
Wikipedia, Licensing
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