Home Entrepreneurship Understanding License System of Enterprise

Understanding License System of Enterprise

by Olufisayo
License System of Enterprise

The word license simply means to give permission. A license can also be defined as authorization by a licensor to use the licensed material by the licensee.

A license may be granted by a party called licensor to another party called licensee as an element of an agreement between those parties.

In particular, a license may be issued by authorities, to allow an activity that would otherwise be forbidden. It may require paying a fee and/or proving a capability.

The requirement may also serve to keep the authorities informed on a type of activity and to give them the opportunity to set conditions and limitations.


Many licenses are valid for a particular length of time. This protects the licensor should the value of the license increase, or if market conditions change. It also preserves enforceability by ensuring that no license extends beyond the term of intellectual property ownership.

Related: Processing Time and Other Things to Consider When Forming an LLC


A license may stipulate what territory the rights pertain to. For example, a license with a territory limited to Nigeria would not permit a licensee any protection from actions for use in Ghana

Trademark and brand licensing

A licensor may grant permission to a licensee to distribute products under a trademark. With such a license, the licensee may use the trademark without fear of a claim of trademark infringement by the licensor.

Photo by Radu Daniel ( MRD ) from Pexels

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Nile April 4, 2011 - 10:41 AM

A lot of people have no idea what licensing, especially for businesses mean. In fact, a lot of bloggers I know and have talked to, have been confused on whether they need a business license, like LLC or just be a sole proprietor. While it is a choice, the licensing really does help legal-wise when things might become a bind.

Olufisayo April 4, 2011 - 1:39 PM

Thanks for your comment Nile, I agree with you..

Akinbami September 25, 2012 - 12:41 PM

What a qualitative and educative site. Keep it up. Thanks a million times.

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