An international business licensing agreement involves two firms from different countries, with the licensee receiving the rights or resources to manufacture in the foreign country. Rights or resources may include patents, copyrights, technology, managerial skills, or other factors necessary to manufacture the good.
Why international licensing is important?
Key takeaways International licensing is an important way for an apparel company to increase profit and diversify revenue streams. A licensor can exploit its brand presence by expanding into new product categories, gaining access to new technology, resources, markets and geographic areas.
What is international licensing and what are its advantages?
When a licensing arrangement is in place, then the licensor is able to get their product into new markets much easier than if they were doing the work on their own. It is much easier to enter foreign markets in this manner, as the license allows for the intellectual property to jump border requirements.
What is the meaning of licensing in business?
Licensing can be defined as a contract or agreement between two companies, where one company permits another company to manufacture its products under specified conditions and for a specified payment.
What are business licensing examples?
Examples of licenses include a company using the design of a popular character, e.g. Mickey Mouse, on their products. Another example would be a clothing manufacturer like Life is Good licensing its designs and brand in a certain country to a local company.
What is licensing in international business with examples?
Licensing is another way to enter a foreign market with a limited degree of risk. Under international Licensing, a firm in one country permits a firm in another country to use its intellectual property( Patents, trade marks etc).
What are the types of licensing?
How to decide between types of licensing agreements
- Patent Licensing. Patents cover science and innovation. …
- Trademark Licensing. Trademarks are signifiers of commercial source, namely, brand names and logos or slogans. …
- Copyright Licensing. …
- Trade Secret Licensing. …
- Exclusive. …
- Non-exclusive. …
- Sole. …
How do licensors get paid?
The Licensor receives a perpetual/time bound payment as a percentage of sales in regards for using the intellectual property. You can take for example – an earning from copyright, patent on new products, and consumer product licensing more. Royalties and license are members of same royal family.
What are the challenges of international licensing?
Particularly, international licensing is itself open to various problems, such as ‘payment risk’ (which arises from under-reporting of earnings and currency differences) and ‘valuation risk’ (the uncertainties in valuing the licensed trademark) (Mottner and Johnson, 2000) .
Why would a company use a licensing agreement?
Licensing involves obtaining permission from a company (licensor) to manufacture and sell one or more of its products within a defined market area. The company that obtains these rights (the licensee) usually agrees to pay a royalty fee to the original owner.
What is an example of licensing?
Example: An example would include Walt Disney granting McDonalds a license for McDonalds to co-brand its McDonalds Happy Meals with a Disney trademarked character; (b) A license where a technology company, as licensor, grants a license to an individual or company, as licensee, to use a particular technology.
Why is licensing important?
Importance of Licensure. Professional licensure protects the public by enforcing standards that restrict practice to qualified individuals who have met specific qualifications in education, work experience, and exams.
What is an advantage of licensing?
The advantages of licensing agreement include increasing market share, lowering capital requirements, increasing the return on investment, and decreasing financial and legal risks.