I recently contracted with a developer to build a mvp for the business. We were operating on an understanding that we would own the code upon completion of version 1.0. Now, their legal team has stated that they will not be turning over the code, instead they will give us a license to it
It would indeed seem that they were not operating with the same understanding as you at all. I hate to sympathize with their position, but without seeing the contract nor hearing the conversations or e-mails between you I don't know how someone can advise you. One of the factors determining their reluctance to give you the source code, is if they are also producing a similar product for someone else (ie, this is a "customization.") or whether they would be unable to produce a similar product for the next customer. I am sure that protecting their options in the future is a part of their rationale. Think about it, if they give you the source code, you could also take it to a competitor who could then copy their methods in support of THE DEVELOPER'S COMPETITORS.
It should be clear by now that you ought to have insisted on getting the Source Code as part of the software license agreement (SLA). It sounds to me as though what they are doing is standard practice unless otherwise specified. Lots and lots of consulting companies build products and license to those products to their customers. For most customers, that suffices. I am not sure what it means down the road if this company goes out of business and you need advanced support. Probably it means you would be hurt, unable to get support and unable to continue. So ask them what are the assurances you can get from them that if they are not there to support future enhancements ot platform changes, what can you do - would they be willing to give you the Source Code in that future scenario.
Have you paid them any money? Do you have the source code?
If you have paid them money and not gotten what you bargained for, then you my friend have purchased a pig in a poke.
If you have not paid them, don't unless and until they deliver what they promised. If they are unwilling, get someone else to build it for you.
You state that they have a legal team, do you? It may simply come down to who has the best lawyers and who is willing to spend the most money on lawyers.
It may be better to simply cut your losses and move on.
It does seem the understanding you had going into the situation changed after the work was produced. Unless you had the original understanding codified in a contract, the developer is fully within their rights to issue you a license to the work rather than full ownership. Especially when building MVPs, it's important to have issues of IP ownership solved ahead of creation rather than after creation. IP ownership is automatically conferred to the creator of the work. You may want to discuss terms for your purchase of the IP outright now that it is built, but the developer is certainly within their rights.