Answer :

Licensising is an easier way to expand globally due to the following reasons:

a. The licensee sets up the business with his own money and the licensor does not have to invest anything. So, it is a cheaper way to start a business.


b. Licensor does not have to bear any liability.


c. He receives royalty which is a predetermined price. He continues to get this fees irrespective of whether the licensee is making a profit or incurring losses.


d. A licensee is a local person who has a better understanding of the local marketing strategies and the business environment.


e. He also handles the business and foreign country so there is a less chance of government intervention.


f. According to the terms of the licensing, only the licensee can make use of the licensor's copyrights, patent, etc in foreign countries. This reduces the risk of the misuse of intellectual property.


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