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In this video tutorial, Matthew explains how to create a licensing agreement using legal templates from legaltemplates.net. He shows how to access the business forms section, scroll to find the license agreement template, choose Texas, and fill in details such as the owner of the agreement, the intellectual property being licensed, the licensee's information, and the type of license (exclusive or non-exclusive). This process helps clarify the terms and conditions of the agreement for both parties involved.