A license is an agreement through which a licensee leases the rights to a legally protected piece of intellectual property from a licensor - the entity which owns or represents the property -- for use in conjunction with a product or service.
Licensing is defined as the process of leasing a trademarked or copyrighted entity (known as a "property") for use in conjunction with a product, service or promotion. The property could be a name, likeness, logo, graphic, saying, signature, character or a combination of several of these elements.
Source: Developed by Licensing Brands International
Licensing is usually based on a contractual agreement between two business entities: the owner or agent of the property, also known as the licensor and the renter of the rights, and the prospective licensee - generally a manufacturer or service provider who believes that by using the property as a marketing tool, it can sell more of the product or otherwise attach itself to the emotion generated by the property. For example, the emotion might be: