late Middle English: via Old French from Latin licentia 'freedom, licentiousness' (in medieval Latin 'authority, permission'), from licere 'be lawful or permitted'
Note that in British English licence is the correct spelling for the noun, and is also an acceptable variant spelling of the verb. In US English both noun and verb are spelled license.
Do not confuse licence with license. Licence is a noun which means 'a permit to do something' (a driving licence), whereas license is a verb meaning 'give a permit to someone; allow something' (the loggers are licensed to cut mahogany trees). In American English, both the noun and the verb are spelled license.