Licensing and Franchising (7:35)

This screencasts discusses the contractual relationships, licensing and franchising. In international business both grant foreign partners permission to use the focal firm’s intellectual property in exchange for a continuous stream of payments. Licensing grants a firm the right to use another firm’s intellectual property for a specified period of time in exchange for royalties or other compensation. Franchising allows one firm the right to use another’s entire business system in exchange for fees, royalties, or other forms of compensation. A royalty is a fee paid to the licensor at regular intervals to compensate for the temporary use of intellectual property.