Licensing · Essay 07
Sub-Licensing — Can Your Licensee License Someone Else?
A mark passed down three tiers is being used by someone the owner has never heard of, under standards nobody in the chain remembers agreeing to.
A national retail licence, granted to one operator to move quickly across Nigeria, quietly became four: the licensee, wanting to expand faster than she could manage alone, sub-licensed three regional operators of her own choosing, without asking. Two ran the concept well. One did not — cutting corners on the standards nobody had actually told her about, because the licensee who recruited her had passed on the name and little else. The owner learned of this operator's existence from a customer complaint, and learned her name from the complaint itself. She had never approved her, never met her, and had granted nobody the right to be added to the chain in the first place.
Paul Magaji · 5 min
Every clause this cluster has covered so far assumes two parties: an owner and a licensee. Sub-licensing asks what happens when the licensee wants to become an owner herself, granting rights of her own to a third party the original owner never vetted, never approved, and — if the contract is silent — may never even learn exists until something goes wrong.
A licence held by one operator is a relationship. A licence sub-licensed twice is a chain, and a chain is only as strong as the link nobody checked.
Act One
Silence is not permission
The question every licence eventually raises, usually by accident rather than by negotiation, is whether a licensee may sub-license without being told she can. Nigerian law has no statute answering this specifically for trademark licences, and the answer has to be reasoned from a principle already settled elsewhere in this cluster rather than invented fresh.
The quality-control doctrine establishes that a trademark licence survives only because the owner retains real control over how the mark is used — inspection, approval, the standards a licensee must meet. That control is not abstract; it depends on the owner knowing who is using her mark and having actually assessed them. A licensee who sub-licenses to a third party the owner has never approved has, in effect, delegated the owner's own vetting function to someone the owner never authorised to exercise it. The reasoning that makes a licence enforceable in the first place is the same reasoning that makes an unauthorised sub-licence a threat to it.
For that reason, the safer and more defensible position — for drafting purposes, regardless of how any particular dispute might eventually be decided — treats sub-licensing as prohibited unless the head licence expressly permits it. A licensee who wants the right to sub-license should negotiate for it openly, at the same table where territory and royalty are negotiated, rather than assume a general licence grant carries it by implication.
Act Two
Where sub-licensing is permitted, four things have to hold
Layer One
A sub-licence cannot grant more than the head licence holds
A licensee cannot pass on a right she was never given — an old principle, and one that applies here without exception.
Where sub-licensing is permitted, the sub-licence has to sit inside the boundaries of the head licence on every dimension already covered elsewhere in this cluster — territory, field of use, duration, and the standards document itself. A head licensee with rights to Lagos alone cannot sub-licence Abuja; one with a licence expiring in two years cannot grant a sub-licence running for five. The head agreement should say this expressly rather than leave it to be inferred, because a sub-licensee negotiating in good faith with the head licensee has no independent way to verify the boundaries of what she is actually being offered.
The Distance
The further a right travels from the person who originally held it, the harder it becomes for anyone downstream to verify that it was ever real — which is exactly why the boundary has to be stated, not assumed.
Layer Two
The owner keeps approval over who the sub-licensee is
Permission to sub-license is not the same as permission to sub-license to anyone.
Even where sub-licensing is allowed, the head licence should reserve the owner's right to approve each specific sub-licensee before the sub-licence takes effect — the same vetting a direct licensee would receive, exercised one tier removed rather than abandoned. A blanket right to sub-license with no ongoing approval mechanism is functionally a right to select the owner's business partners on her behalf, without her ever being consulted on a single one of them.
The Distance
The operator who damaged the brand in the opening was never assessed by anyone who actually cared about protecting it — she was recruited by someone whose own incentive was speed of expansion, not quality of partner.
Layer Three
The sub-licence dies with the head licence, unless it's written otherwise
A sub-licensee's rights are only ever as durable as the licence they were carved out of.
Because a sub-licence exists only by virtue of the head licence, the ordinary position is that a sub-licence terminates automatically when the head licence ends — regardless of whether the sub-licensee has done anything wrong, and regardless of how much she has invested in reliance on an arrangement she had no direct control over. A sub-licensee who wants protection against this needs a non-disturbance clause negotiated into either the head licence or a separate agreement directly with the owner, allowing her to continue — usually on the same terms, directly with the owner — if the head licence ends for reasons unrelated to her own performance. Without one, a sub-licensee's entire position can evaporate through a dispute she was never party to.
The Distance
A well-run sub-licensee, performing every obligation she was ever given, has no protection at all against the head licensee's own unrelated failure — unless somebody thought to negotiate one before the relationship began.
Layer Four
No privity, and the step-in right that fixes it
The owner ordinarily has no direct contractual relationship with a sub-licensee at all — enforcement runs through the licensee in the middle, and stops if the licensee in the middle stops enforcing.
Where the head licensee is unable or unwilling to enforce standards against her own sub-licensees — through insolvency, disinterest, or simple loss of control over an arrangement she created — the owner has no direct contractual hook to reach the sub-licensee herself, because no contract exists between them. A step-in right, reserved in the head licence, allows the owner to deal directly with a sub-licensee in defined circumstances — typically the head licensee's insolvency or a sustained failure to enforce the standards the sub-licence was supposed to carry. Without it, the owner's only remedy for a failing sub-licensee is against a head licensee who may by then be unable or unwilling to do anything about it.
The Distance
The owner in the opening discovered the sub-licensee's existence from a complaint, not from her own licensee — and had no direct means of addressing the problem without first resolving a dispute with the person standing between them.
Every tier a mark travels through is a tier the owner did not personally choose, running further from the one relationship she actually negotiated.
The three regional operators in the opening were never a decision the owner made. They were a decision her licensee made on her behalf, using a right nobody had actually granted — and the owner learned about it only once the chain had already produced its weakest link.
This publication is educational and analytical. It describes how legal and commercial structures work; it does not advise on any particular matter, and nothing here should be relied upon as advice on a reader’s own affairs. The author holds commercial interests in the brand-building and private-label sector examined by this series.