A licensing agreement is a legal contract between two parties, where one party (the licensor) allows the other party (the licensee) to use certain rights, such as intellectual property, trademarks, or technology. This arrangement often involves the payment of royalties or fees in exchange for the right to use the licensed material. Licensing agreements are common in industries like entertainment, software, and franchising. These agreements help businesses expand their reach without needing to invest heavily in new products or services. For example, a movie studio might license its characters to a toy manufacturer, allowing the manufacturer to create and sell toys based on those characters. This benefits both parties by generating revenue and increasing brand visibility.