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In this video, Matthew explains how to create a licensing agreement using legal templates. He guides viewers to the website legaltemplates.net and instructs them to navigate to the business forms section. After scrolling through various forms, he selects the licensing agreement template for Texas. Matthew outlines the necessary steps, including specifying the owner of the intellectual property, the licensee (Mr. Add), and the details of the intellectual property involved. He also discusses the type of license (exclusive or non-exclusive) and encourages viewers to specify the purpose of the agreement if desired. The link to access the templates is provided in the video description.