Sublicensing means you have permission to pass your license to someone else—like if you license software and then want to let your customers use it too. Without a sublicensing clause, you can only use the licensed material yourself and cannot legally share it with others. This matters because many business models depend on sublicensing: a software reseller needs to sublicense to customers, a manufacturer needs to sublicense to distributors, and a platform needs to sublicense to end-users. Under UK and US law, a license is personal to you unless the contract explicitly allows sublicensing. For example, if you buy a software license without sublicensing rights, you cannot legally install it on your customers' computers.
If your business model requires passing the license to others, explicitly require sublicensing rights in the contract—don't assume it's allowed. Negotiate whether sublicensees must sign the same terms as you, whether you remain liable for their actions, and whether there are limits on how many sublicenses you can grant. If sublicensing is prohibited, ask for an exception for your direct customers or business partners.
Frequently Asked Questions
What does this clause mean in simple terms?
Sublicensing means you have permission to pass your license to someone else—like if you license software and then want to let your customers use it too.
Why should I care about this clause?
Without a sublicensing clause, you can only use the licensed material yourself and cannot legally share it with others.
What are my options?
This matters because many business models depend on sublicensing: a software reseller needs to sublicense to customers, a manufacturer needs to sublicense to distributors, and a platform needs to sublicense to end-users.
How does this affect small businesses?
Under UK and US law, a license is personal to you unless the contract explicitly allows sublicensing.