What is it called when a company allows another company to use its brand name or patent in exchange for a fee?

• A. Sponsoring
• B. Branding
• C. Leasing
• D. Licensing

Answer: (D)

Licensing is the arrangement where the owner of a brand or patent allows another company to use that IP under agreed terms in exchange for a fee. The licensor grants rights to use the brand name, logo, or patented technology, typically in a defined market or product category, for a specified period. In return, the licensee pays royalties or a lump sum. This model is common in sports and entertainment, where a team or league licenses its logo to apparel makers, or a tech company licenses a patent to another manufacturer. It differs from sponsoring, which is about funding for exposure; branding, which is the process of building a brand; and leasing, which is renting a physical asset. Licensing specifically covers authorization to use IP in exchange for payment.