Payments. As noted above, the taker generally pays royalties to the licensee. There may be a first advance on royalties, then the continuous royalties are based on sales. Royalties can be paid on the basis of a percentage of turnover or a package. Think of the most appropriate method for both parties (and don`t forget inflation and exchange rates). The licence is generally reduced to a written contract indicating the rights, obligations and payments that are part of the licence. A license may give the underwriter all rights to operate the asset („exclusive license“) or only some of the rights or user rights related to other persons („non-exclusive“ or „limited“ licence). The license normally grants the licensee full valuation rights, as the taker deems appropriate, but may have specific performance criteria or the license expires or does not become exclusive. The term „licence“ has two meanings: one in general terms (for example. B driver`s license) and the other in the economy and commerce. A licence in the broadest sense is „the authorization of an authority to own or use something.“ Again, a succinct definition of the licence is „a promise from the licensee not to sue the licensee.“ This means that, without a licence, any use or exploitation of intellectual property by third parties would involve a reproduction or violation. Such a reproduction would be inappropriate and could be stopped by the application of the legal system if the owner of the intellectual property wishes to do so.  If a person has a franchise, there may be a licensing agreement and there may be several types of licenses within the franchise.
For example, a McDonald`s franchise could include licenses for the use of the McDonald`s logo on products and packaging and another license for the manufacture of its patented processes or ingredients. Licensing is often intellectual property such as trademarks, copyrights or patents. Digital assets such as applications and brands are often licensed. Patent licenses have been studied in formal business models in the field of industrial organization. In particular, Katz and Shapiro (1986) studied the optimal licensing strategy of a research laboratory sold to competing companies in the product market.  It appears that the licensee`s incentives to develop innovation may be exaggerated (compared to the social protection solution), while the licensee`s incentives to disseminate innovation are generally too low. Subsequently, the pioneering work of Katz and Shapiro (1986) was extended in several directions. For example, Bhattacharya, Glazer and Sappington (1992) have taken into account the fact that licensed companies need to invest more to develop marketable products.  Schmitz (2002, 2007) has shown that due to negative selection or moral risk, asymmetric information can lead the research laboratory to sell more licenses than would be the case for complete information.   Antelo and Sampayo (2017) studied the optimal number of licenses in a signalling model.  Domain: a licence can determine the area affected by the rights.