Licensing is a legal agreement that allows one party to use the intellectual property of another party. This can include things like trademarks, patents, or copyrighted materials. For example, a company might license a popular character from a movie to create toys, paying the original creator for the right to use that character. In return for the license, the licensee usually pays a fee or a percentage of sales to the licensor. This arrangement benefits both parties: the licensor earns money from their creations, while the licensee gains access to established brands or products that can help their business grow.