Licensing Agreements & Know-How FAQ

• Why do I need an experienced lawyer for licensing agreements?
  
  Licensing involves defining scope, territory, duration, royalties, quality control and termination rights. Poorly drafted licensing agreements that inadvertently cross into “franchising” territory can be rendered null and void. 

• What’s the risk of using a template contract?
  
  Templates rarely reflect Malaysian law or your commercial realities. They often omit critical clauses on exclusivity, sub-licensing or performance obligations. Worse, a template might inadvertently create a “franchise” relationship without complying with the Franchise Act, making the contract void. 

• How do I protect my know-how when sharing with partners?
  
  Confidentiality clauses and clear definitions of “know-how” are essential. We ensure that your proprietary methods are protected as Trade Secrets, with strict covenants preventing the licensee from using them after the agreement ends. 

• What if the licensee breaches the agreement?
  
  Remedies may include termination, damages, injunctions or specific performance. We draft agreements with strong enforcement mechanisms to ensure you can recover what is owed. 

• How do I ensure my IP is not diluted through licensing?
  
  Quality control provisions are critical. We help you establish strict standards that the licensee must meet, preserving your brand integrity and reputation.  

• Can licensing help me attract investors?
  
  Absolutely. Well-structured licensing agreements demonstrate that your IP is a revenue-generating asset, which significantly enhances your company’s valuation. 

• What is the difference between Franchising and Licensing?
  
  Licensing is a flexible contractual arrangement where you grant rights to use IP (e.g., a logo or technology) with less operational control. Franchising involves a “manual to success,” where you exert strict control over how the business is run, and it requires mandatory government registration . 

• Can I franchise my business without registering?
  
  No. Operating a franchise without registering with the Registrar of Franchises is an offence under the Franchise Act 1998. The agreement can be declared null and void, meaning you cannot enforce it. 

• What is an OEM/ODM agreement?

  These are manufacturing agreements where you license your design or technology to a factory (Original Equipment Manufacturer) to produce goods for you. We ensure these contracts protect your IP so the factory cannot sell your products to others behind your back. 

• Can I license my IP internationally?
  
  Yes, but this requires careful structuring to comply with local laws and treaties. We coordinate with foreign counsel to ensure your rights are enforceable in every jurisdiction you enter. 

  This article is written by 

  Azarith Sofia Binti Aziz
  Principal Associate, Low & Partners