ArcGIS Desktop resolves only the hostname (and not the fully qualified domain name) when returning a borrowed license. This prevents returns on networks, for example sub-domains, where a fully qualified domain name (FQDN) is required to reach the license manager.
In a Concurrent Use licensing model, all ArcGIS licenses are hosted on an ArcGIS License Manager server. For a client machine to consume licenses, it must connect to the license server via the use of a hostname, a fully qualified domain name (FQDN), or the IP Address. The client application such as the ArcGIS Administrator for ArcGIS Desktop or ArcGIS Pro can also borrow the licenses to be used offline. In doing so, the client application stores the information in a trusted storage. One component of the information stored is the hostname of the machine. When returning the borrowed licenses, the application looks for the hostname of the license server. If the license server is not reachable by the hostname, the return attempt fails. This occurs in most networks where the license server is only accessible by the FQDN, for example a license server hosted in the cloud.
"Failed to return borrowed license."
Note: This issue does not affect the Named User licensing model.