Think You Control Your Software? Check the License

A lot of business owners I know have a habit of signing a contract without understanding what it says. Because imagine this.

You’ve just signed a deal for a new software solution. You think you’re all set, that you can use it however you need.

But later, you find out that your rights are much more limited than you thought.

And this happens more than you’d expect. You know what it all comes down to though? Understanding the software license.

Because a software license is the last thing but formality. It’s an agreement that spells out how, where, and for what purpose you can use the software.

If you skip over the details, you might end up paying for something you can’t fully use.

Common Mistakes I See Founders Make and Why They Hurt

When it comes to software licenses, a lot of businesses run into trouble because they make assumptions.

Or they don’t fully understand the fine print.  Here’s where I've seen it usually go wrong:

1) Thinking You Own the Software

Many people assume that once they’ve paid for the software, it’s theirs to do whatever they want with it.

But in most cases, you’re not actually buying the software - you’re buying a license to use it under specific conditions. That's a big difference.

These conditions can limit how you use it, where you use it, and more.

If you don’t fully understand these limits, you could end up frustrated when you realize you don’t have as much control as you thought.

And building a business is all about control. If you didn't want control or freedom over what you do, you would be working 9-5, right?

2) Not Paying Attention to Exclusivity

Some businesses don’t think much about whether the license is exclusive or non-exclusive. But the difference between these two is big.

An exclusive license means only you can use that software, which is great if you’re paying for a custom solution.

A non-exclusive license means the developer can sell the same software to other companies, INCLUDING your competitors.

If you’re counting on the software to give you a competitive edge, that’s a problem.

3) Forgetting About Territory Limits

Many people assume that once they’ve got a license, they can use the software anywhere their business operates.

But some licenses come with geographic limits.

For example, your license might only allow you to use the software in the EU. If your business expands to the U.S., you could find yourself in violation of the agreement.

Or you might be stuck paying for additional licenses just when you need to scale. And these can be high if the other party realizes how much you need their software.

4) Ignoring ‘Field of Use’ Restrictions

Businesses often seem to ignore clauses that limit how the software can be used in different industries or sectors.

A ‘field of use’ restriction might mean you can only use the software in a specific industry.

For example, a license might let you use it in healthcare, but not in retail.

If your business grows into new areas, these limits could stop you from using the software in those sectors.

And that leaves you again to either pay for more licenses or find a workaround.

5) Assuming Full Control Over the Software

A lot of companies assume they can modify, share, or integrate the software however they like once they’ve paid for it.

But software licenses have restrictions on what you can do.

Many don’t allow you to change the code, reverse-engineer the software, or share it with third parties.

If you break these rules, even by accident, you could lose your rights to use the software or even face legal trouble. Serious legal troubles.

The Real Cost of Not Understanding Your License

Let me help you understand this better with a story. Imagine you sign a deal for a software platform you plan to use globally as your business grows.

But six months later, you realize the license only allows you to use the software in the EU.

Expanding beyond that means negotiating a new deal—at a much higher cost than you expected.

Now you’re stuck, renegotiating terms at a critical moment for your business. You can't grow unless you buy.

But think about the opposite situation. You buy a custom software solution that you think is exclusive to your company.

But later, you find out the developer sold the same software to your competitors.

Suddenly, your “unique” solution isn’t so unique, and you’ve lost the advantage you thought you had.

These are the kinds of problems you can face when you don’t fully understand your software license.

What I Would Focus on to Protect Your Business

To avoid these headaches, here's what I would focus on.

1) Check if the License is Exclusive

First things first, I'll check whether you’re getting an exclusive or non-exclusive license.

If you’re paying for custom software, you’ll probably want an exclusive license to make sure you’re the only one using it.

If it’s off-the-shelf software, a non-exclusive license is normal, but it’s still good to know what you’re signing up for.

2) Look for Territory Limits

I'll also make sure the license allows you to use the software wherever your business operates.

If your business is international or expanding, ensure the license covers all the regions you need. If it’s limited to a specific area, be prepared for extra costs down the road.

3) Check the ‘Field of Use’ Clause

The next thing I'd check is to see if the license limits what industries or applications you can use the software for.

If you plan to expand into new areas, think about negotiating for broader rights to avoid restrictions later on.

4) Understand What You Can and Can’t Do

The next step is always to read the terms carefully to understand how you’re allowed to use the software.

Can you modify the code? Can you share it with other teams or contractors? Knowing this upfront can prevent you from unknowingly breaking the rules and facing legal or financial issues.

5) Plan for Future Growth

This is a point a lot of people miss because they rush the whole deal.

You have to make sure the license allows some flexibility for future changes.

Whether it’s adding more users, expanding to new regions, or adjusting the software for new business needs, your license should give you room to grow.

Final Thoughts

I get it. Software licenses can seem like a bunch of legal jargon. You sign them and call it a day.

But understanding the key details can protect your business and make sure you get the most out of your investment.

Don’t assume you have full control just because you’ve signed the deal.

Take the time to check for things like exclusivity, territory, and restrictions so you don’t run into any costly surprises later.

Because when it comes to software licenses, the more you know upfront, the fewer problems you’ll face down the road.

If you need my help reviewing these terms for you, so you can negotiate better with the other side.

Then reply with "REVIEW" and let's see what you're working with!