Licensed fabrics that have favorite TV and movie characters on them are quite popular especially with children. I often receive requests to make ponchos or bibs using licensed fabrics from Disney, John Deere, NFL teams and other companies.
The Facts About Licensed Fabrics:
If you’ve ever bought licensed fabrics, you may have noticed that the selvage (edge) of the fabric is usually printed with these words: “For home use only. Not intended for commercial use”.
That warning means just what it says. Those characters, phrases, and even color combinations may have been copyrighted by the original owner. Using those words or images for business gain is not legal. Some small business owners believe that a multi-million dollar corporation is not going to concern themselves with a small business’s infringement of their intellectual property.
The truth is that Disney, Marvel, and other companies HAVE filed suits against small business owners who have used their images, color combinations, and copyrighted phrases without first purchasing a license to do so. 
My Policy:
I have chosen not to sell items made from licensed fabrics. It is so tempting to bend the rules to make a poncho with Ana and Elsa, Minions, or Minnie Mouse fabric. But the bottom line is that I am not willing to jeopardize my business by infringing on the rights of other businesses.
It is perfectly legal to make gifts, donations, and personal items with licensed fabrics. It is also legal to make items from licensed fabrics if my customer purchases the fabric and delivers it to me. In that case, I’m performing a service, not selling a product.
Just this morning, I made this Paw Patrol bib for my sister’s granddaughter. While I was happy to indulge little Brinley’s obsession with Paw Patrol characters, I can guarantee that you will never see licensed fabrics in my Etsy shop or in my Facebook group. I’m playing it safe with my business, and I trust that my customers will understand my reasons for that.