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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 and navigates to the "Business Forms" section to find the necessary documents. After selecting the "Licensing Agreement," he chooses Texas as the jurisdiction and begins filling out the required information. Matthew emphasizes identifying the owner of the intellectual property, the party acquiring the license, and specifies the type of license (exclusive or non-exclusive). He encourages viewers to fill in details about the intellectual property and its intended use for clarity in the agreement.