The entry fee under a license agreement is a lump-sum payment made by the licensee to the licensor upon signing the contract or at the start of the license term. It is the initial payment for the right to use a technology, trademark, patent, or other intellectual property asset owned by the licensor.
The upfront fee can serve several purposes:
- Compensation for the provision of intellectual property and related knowledge.
- Securing the licensee’s commitment and recognition of the license’s value.
- Financing the initial costs of technical assistance, training, or documentation provided by the licensor.
In summary, the upfront fee is a fixed initial payment, separate from any periodic royalties, that allows the licensee to legally and immediately benefit from the right to use the licensed technology or know-how.