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In this video, Matthew explains how to create a licensing agreement using legal templates. He provides a link to legaltemplates.net, directing viewers to the website's business forms section. After navigating through various forms, he selects the "Licensing Agreement" and specifies Texas as the location to create the document. Matthew discusses the key components of the agreement, including the owner of the intellectual property, the licensee, the type of license (exclusive or non-exclusive), and the licensing purpose, emphasizing personalization based on individual needs.