Licensing involves legally allowing another individual or organization to manufacture or market a product in exchange for fees or royalties. It allows a manufacturer to use intellectual property like technology, patents, trademarks or designs owned by another entity. Licensing is a contractual agreement between two businesses where the licensor permits the licensee to use its intellectual property. It can be a profitable strategy for entrepreneurs to increase revenue without risk, and is commonly used in industries like toys to produce new products based on popular movies, TV shows and characters.