When a company authorizes another entity to manufacture and sell products that are not directly related to its own brand, this is called a license. This type of contract is frequently used to allow the marketing of merchandise featuring cartoon characters, such as clothing, stationery, or toys for children. The purpose of a license is generally to boost sales and/or increase retail prices. Typically, a license is granted in exchange for a sales commission, along with a commitment to achieve a minimum revenue target.

It is important to note that the misuse of licenses can damage a brand by devaluing it and making it seem commonplace. Some luxury brands have seen their reputation tarnished due to excessive use of licenses, which has negatively impacted their market value.