Typically, the franchise agreement is for ten years. Get Quality Help. Table 7. 25 “Market entry options”). C) licensing contract covers more aspects of operations. management contracts. • Franchising vs licensing – Licensing of IPRs is an element of franchising – Licensing of IPRs is the means to reach the end • Goals of franchising – For the franchisor: geographically expand its busi ness without taking financial risks – For the franchisee: benefit from the brand, experi ence and know-how of the franchisor FranchisingSTRATEGY AND OPPORTUNITY ASSESSMENT FOR INTERNATIONAL BUSINESS; 11. Bashar Hassan. Franchising. International Business: The New Realities, 4e (Cavusgil) Chapter 15 Licensing, Franchising, and Other Contractual Strategies 1) _d. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Chapter 15. A patent exclusively refers to a distinctive design, symbol, logo, word, or series of words placed on a product label. Create flashcards for FREE and quiz yourself with an interactive flipper. 15. Uploaded By ebrarpatriot. Change Product. Study with Quizlet and memorize flashcards containing terms like T/F Licensing is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation. On the other hand, international licensing is a foreign market entry mode that presents some. Focal firm has moderate level of control over the foreign partner. a. The nation lacks the skilled labor and technical know-how to handle such large-scale projects. Question 74. d. Franchising. License 101 Where lives Entering?. an advanced form of licensing in which the firm allows another the right to use an entire business system in exchange for fees, royalties, or other forms of compensation. Payment is made only after you have completed your 1-on-1 session and are satisfied with your session. 2 Understand licensing as an entry strategy. chesiebels. B) They are more susceptible to volatility and risk compared to FDI. B) The franchisor holds much power, including superior bargaining power. Licensing agreement specifies nature of relationship between licensor and licensee. The licensor provides no technical support or assistance in most cases. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in international business are cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an explicit contract T/F, Exporting and foreign direct investing are two common types of contractual entry. From a licensee standpoint, there are fewer risks in product development, market testing, manufacturing, and distribution. Licensing, Franchising, and Other Contractual Strategies. 2. Chapter 16 – Licensing, Franchising, and Other Contractual Strategies I. economic output and, depending on your needs, goals and circumstances, may be the right choice for you. 3. Licensing involves granting rights to use intellectual property, while franchising grants rights to use an entire business model. e. 3. , licensing and franchising) have lower up-front costs than investment modes do. Disadvantages. When the parties make licensing or franchising agreement, the parties should critically. Licensing: An arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period of time in exchange for royalties or other compensation. Table 7. In this section, we will explore the traditional international-expansion entry modes. The franchisee is. Licensing: An arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period of time in exchange for royalties or other compensation. A) joint ventures B) licensing C) 100-percent ownership D) exporting E) franchising, 2) For Walt Disney. 1. The present model permits any strategy to be compared with any other strategy. Exporting entails selling products to foreign customers. actively manage a foreign. d. focal firm does everything for business and hands it over to customer after training. A license is “a contractually transferred right to use a legally protected or unprotected in vention in exchange for a fee or another type of compensation” (Mordhorst 1994, p. Learn faster with spaced repetition. 4 Franchising 7. Licensing Agreement: A licensing agreement refers to a written agreement entered into by the contractual owner of a property or activity giving permission to another to use that property or engage. Choose from 29 different sets of Licensing, Franchising and other contractual strategies flashcards on Quizlet. d. cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit contract intellectual property ideas or works created by individuals or firms, including discoveries and inventions; artistic, musical, and literary works; and words, phrases, symbols, and designs They are governed by a contract that provides the focal firm with moderate level of control over the foreign partner They typically include the exchange of intangibles and services Firms can pursue them independently or in conjunction with other entry strategies They provide dynamic, flexible choice They often reduce local perceptions of the. 1. Contractual Entry Strategies Contractual entry strategies Two common types of contractual entry strategies are licensing andLicensing. If you want to have more autonomy in business decisions with the freedom to make your own vision. But, the organization has little control over technology and marketing. Study with Quizlet and memorize flashcards containing terms like Inbound licenses, Outbound licensing, Contractual entry strategies in international business and more. Licensing, Franchising and other Contractual Strategies. Study with Quizlet and memorize flashcards containing terms like Contractual Entry Strategies in International Business, Intellectual Property, Intellectual Property Rights and more. It described the development of Chinese hotel industry at the end. 2Understand licensing as an entry strategy. Low control, low local knowledge, potential negative environmental impact of transportation. For international trade, Foreign market entry modes are the ways in which a company can expand its services into a non-domestic market. Franchising makes up 10% of the U. Microfranchises: Franchises operated by one or two people. Introduction to International Business Study Guide Exam 3 – Part 1 Chapter 16: Licensing, Franchising and other Contractual Strategies • What does licensing refer to? An arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period of time in exchange for royalties or other compensation. Learn the distinguishing between licensing and franchising and why licensing is not certain alternative on franchising. Flashcards. Licensing is designed to reduce the risks involved in doing business for everyone involved. Chapter 16: Licensing, Franchising and other Contractual Strategies. Licensing is an agreement between Licensor and licensee wherein one organization gives the other organization access to its patents, trade secrets, or technology for a fee known as a royalty. contractual agreements. licensing team. docx from INT- 113 at Southern New Hampshire University. Some firms view licensing as a supplementary strategy to other entry strategies, such as exporting or FDI. Licensing specifies the territory as well as period. Each entry mode has different pros and cons, addressing issues like cost, control, speed to market, legal barriers, and cultural barriers with different degrees of efficiency. Contractual entry strategies in international business are cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an. 2 Exporting 7. These options vary in terms of how much. Brooke MA, PhD, FIEx & Peter J. Franchising is an example of a contractual vertical marketing system. is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation. Chapter 16 - Licensing, Franchising, and Other Contractual Strategies. D) strategic decision making. A. 2. 15. the franchising and licensing as market entry mode in general and in hotel industry. ) The many technological barriers to doing business globally. 2. ( True/False ) Question 1Start studying Ch 16: Licensing, Franchising, and other Contractual Strategies. Correct Answer: Access For Free . Created by. 4. They are governed by a contract that provides the focal firm a moderate level of control over the foreign partner. cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit. Management Service Contracts A management service contract is a long-term agreement, of up to ten years or even longer, whereby the legal owners of the property and real estate enter into a. The globalization of franchising took off in the 1990s as a result of push factors (domestic. By entering your email, you agree to receive marketing emails from Shopify. accepting a business model for doing a business in a traditional manner. 11 “Market Entry Options”). a. Describes the appearance or features of a product. 1 Licensing. Global Market Opportunity Assessment • Estimating Demand in Emerging Markets • Global Macro Trends that Affect International Business Licensing, Franchising, and Other Contractual Strategies: Contractual Entry Strategies Licensing as an entry strategy advantages and disadvantages of licensing Franchising as an entry strategy Other. Intellectual property describes. Exporting, joint ventures, direct investment, licensing, franchising, and other forms of an alliance is duly considered as market entry types. Verified Answer for the question: [Solved] Which of the following is an advantage of franchising to the franchisee? A) reduced expenses as the franchisor provides supplies, equipment, and products B) Minimum initial investments or royalty payments are applicable. OTHER CONTRACTUAL ENTRY STRATEGIES -Under build-operate-transfer (BOT) arrangements, the firm contracts to build a major facility, such as a power plant, which it operates for a period of years and then transfers to the host-country government or other public entity. Can be pursued independently or in conjunction with other entry strategies. c. The difference between licensing and franchising is that franchise agreements involve an extensive business relationship between franchisor and franchisee whereas license agreements are limited and relate to a. contract manufacturing. On the flip side, potential for revenue growth is more limited because the parent company will only earn a percentage of the earnings from each new store. In other words, ownership rights in franchising are seen in the ratio of company-owned to franchisee-owned stores and residual income rights, as traditionally conceptualized in Fig. Contract manufacturing is when a firm enters into a contract with local manufacturers in foreign countries to get goods produced as per its specifications. Franchisor may impose inappropriate technical or managerial systems on the franchisee. provides technical specifications to a subcontractor or local manufacturer. Therefore, a franchise includes a licence. if the franchisor has already achieved considerable success in franchising in its domestic market. A) markets competing products for significantly lower prices B) uses the licensing asset to create products of poor quality C) refuses to pay the agreed upon royalties to the licensor D) does not guarantee future expansion in the. Brand owners lease their patents, software, or characters to other companies. 3. Equity relations allow firms to have some direct control, while contractual does not. _Lic_Update (2). Study with Quizlet and memorize flashcards containing terms like 5 Methods for entering the global market place from least risky/return to most risky/return, Exporting, Licensing and Franchising and more. Franchising requires ongoing assistance from the franchiser while licensing normally involves a one-time transfer of. a. Franchising is a variation of licensing strategy in which there is a contract between the parent company franchiser and. Two Types of Contractual Relationships. Study with Quizlet and memorize flashcards containing terms like 1) For Starbucks and other companies whose business models include a service component, it is not recommended that they use one of the following methods for going global. Learn. What Are The Types of International Business. Start studying Ch. • Understand infringement of intellectual property Foundation Concepts • Contractual entry strategies in international business: Cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an explicit contract. 1. Two common types of contractual entry strategies are licensing and franchising. Build trust, build interpersonal relationships, get to know each other, build an informal network between the 2 firms managers. Essentially, it entails selling the rights to conduct a proprietary business to another individual, usually in a specified geographic region. e. Licensing is a contractual arrangement where a company grants permission to another party to use its intellectual property or brand. My Library. Franchising is a contractual international market entry mode as a licensing agreement when an organization wants to enter a foreign market quickly with low risk and resource commitment. Chapter 16 Licensing, Franchising, and Other Contractual Strategies Learning Objectives: 1. Similarly, explicit contracts define franchising relationships. After few years, once the know- how is transferred, there is a risk that the foreign firm may begin to act on its own and the international firm may therefore. licensee: In a licensing relationship, the buyer of the produce, service, brand or technology being licensed. Foreign Direct Investment and Collaborative Ventures; 15. Study with Quizlet and memorize flashcards containing terms like Contractual Entry Strategies in IB, Intellectual Property, Contractual Entry Strategies and more. 15. , Licensing Agreement, Copyright Licensing and more. Two common types of contractual entry strategies are licensing and franchising. Match. Match. A) the licensee B) patent. The licensee/franchisee gets immediate brand recognition and may quickly overtake the competition by offering a product or service for which there is existing unmet demand. d. 2. Another popular way to expand overseas is to sell franchises. Docsity. View BUS 417 . Browse With TopicA licensing agreement is a contract between two parties (the licensor and licensee) in which the licensor grants the licensee the right to use the brand name, trademark, patented technology, or ability to produce and sell goods owned by the licensor. Low control, low local knowledge, potential negative environmental impact of transportation. Licensing, Franchising, and Other Contractual Strategies Learning Objectives • Explain contractual entry strategies. On the other hand, franchise agreements allow the use of trademarks, additional intellectual. Test. Human Resource Management. Joint R&D iv. Licensing involves granting rights to use intellectual property, while franchising grants rights to use an entire business model. Geb 3375 Introduction to International Business – Study Guide Exam 3_ Part1 1 Introduction to International Business Study Guide Exam 3 – Part 1 Chapter 16: Licensing, Franchising and other Contractual Strategies With this chapter we continued the “entry strategies” part we had interrupted for exam 2. Chapter 15: Licensing, Franchising, and Other Contractual Strategies Key Elements Contractual Entry strategies in Franchising and licensing both offer business opportunities with some of the work already done for you, but that doesn't mean they're exactly the same. Two common types of contractual entry strategies are licensing and franchising. Either way, the licensor gets a kickback—as a. Business model: The first difference is in the business model. Study Chapter 16 flashcards. they are governed by a contract that provides the focal firm with a moderate level of control over the foreign partner 2. 1 Advantages and Disadvantages of Di erent Modes of Internationalization. master franchise. Ctrl+k Search questions by imageRetail franchising is the method of opening a single store under the umbrella of an established name, branding, trademark, and product line. The International Franchise Association defines franchising as a "continuing relationship in which the franchisor provides a licensed privilege to do business, plus assistance in organizing training, merchandising and management in return for a consideration from the franchisee ". While extant research revolves around the level of resource commitment and control in foreign activities, non-traditional. Licensing is governed by a licensing agreement, which involves a one-time transfer of property or rights for a fee. 4. the inherent disadvantages foreign firms experience in home countries. real business leading guides that top everything from franchises basics to advanced vote growth strategies. 0 (1. Learn this differs between licensing and franchising and why general is not an alternative for franchising. Ch. Ask AI New. Verified Answer for the question: [Solved] When compared to licensing agreements, the relationships established in franchising arrangements are typically volatile and short-term. Licensing, Franchising and other contractual strategies. CHAPTER 15 LICENSING FRANCHISING AND. Licensing: Licensing offers several benefits for both the licensor and the licensee. 2. Leasing is Especially Beneficial to _____ Question 80. Since franchisees will assume many of the responsibilities otherwise shouldered by. One of the major differences when it comes to franchising vs. True/False . 3 Describe the advantages and disadvantages of licensing. Post termination issues. Ideas or works created by firms or individuals, such asintellectual property grants another firm the right to usethat property for a specified period of time in exchangeView Homework Help - Week 12. Business format franchising accounts for most of the explosive growth in franchising that has occurred in the past five decades. As compared to other retailers, it is safe to say that IKEA has a unique organisational. Flashcards. S. Low development cost and low risk in overseas expansion are advantages of this entry mode. Equity-based arrangements. c. Licensing and franchising. Test. This part concerns the sale of knowledge rather than the sale of goods—licensing, franchising, management contracts and other similar arrangements. C) The licensee cannot cancel the contract with the. Exporting involves marketing the products you produce in the countries in which you intend to sell them. B) franchise contract must include a foreign government. Licensing typically involves royalties or. 15. -flexibility. Licensing is an arrangement by which the owner of intellectual property grants another firm the right to use that property for a specific time period in exchange for royalties or other compensation. Learn. Internal: Strategic. A modern approach to international business. A franchised. Licensing ii. CONTRACTUAL STRATEGIC ALLIANCES i. View Homework Help - Week 4 - Subway Case. Default and termination 3. Product Adaption. industry are franchising and management-service contracts (MSC). Licensing is a legal process in which one firm pays to use or distribute another firm's resources. What are Franchising? Franchising is an business agreement that includes the license is a trademark, of payment of a fee, and control over how the underlying franchises business has operated. B) An Indian automobile manufacturing company buys engines from a Japanese manufacturer for its. Stage Three: Specify a specific format that is either equity based or contractual (nonequity based). strategic alliances. Disadvantages. A) franchise contract is more specific and usually longer in duration. Licensing. • Contractual entry strategies (franchising, licensing, management. skhaira2118 Terms in this set (26) contractual entry strategies in IB cross-border exchanges in which the relationship between the focal firm & its foreign partner is. Your matched tutor provides personalized help according to your question details. Entering. Match. Licensing, Franchising, and Other Contractual Strategies 438 Part 5 Functional Area Excellence 464 16. Chapter 15 Licensing, Franchising and other Contractual Strategies Internatonal Business:Contractual entry strategies in international business. Direct exporting is often considered the default choice for new market entry. The Five Common International-Expansion Entry Modes. 2. Question 14. Change Message. Study with Quizlet and memorize flashcards containing terms like Contractual entry strategies in international business, intellectual property, intellectual property rights and more. D)It is typically characterized as an unstable, short-term entry. Firms need to evaluate their options to choose the entry mode that best suits their strategy and goals. 15. Ch. Licensing, Franchising, and Other Contractual Strategies. Indirect strategies are indirect/direct exporting, licensing, franchising and contractual agreements (see Table 2). Posted by Rully Mangunsong at 10:16 AM. Market entry modes for international businesses. Licensing, Franchising, and Other Contractual Strategies Internal: strategic Register IP target country chain1. A licensing agreement is generally less complicated and easier to finalize than a franchise agreement. External: Operating Enviornment. Moderate-Control Strategies (Licensing, Franchising and other Contractual Strategies, Project Based (non-equity) collaborative ventures) "Moderate": -control available to the focal firm over foreign operations. Licensing: An arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period of time in exchange for royalties or other compensation. Licensing, Franchising and. Learn from your partner (and apply that knowledge within your organization) Study Chapter 5: Entry into Foreign Markets flashcards. 2. Franchising. An organisation will need to determine their desired level of commitment, flexibility, control, presence and risk when going global, in order to choose the entry mode which best suits their situation. On the other hand,. Contract usually runs five to seven years and is renewable at option of parties. : Licensing is a contractual agreement in which a licensor grants a licensee the right to use its intellectual property,. Licensing is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation. Management Contract 4. Advantages and disadvantages of franchising. 4. Franchising only deals with the provision of a service, while licensing can be for both services and products. Licensing. 1-1 BUS 434 Market Entry Licensing, Franchising, and Other Contractual Strategies 1-2 Contractual Relationships • Licensing: An arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period of time in exchange for royalties or other compensation. 16 Licensing, Franchising, and Other Contractual Strategies. International Business Strategy, Management & the New Realities. Either way, the licensor gets a kickback—as a. As a rule, licensing strategies inhibit control and produce only moderate returns. Licensing: Arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period of time in exchange for royalties or other compensation. B) franchising. other contractual agreements and equity modes (wholly owned subsidiary or joint venture). Contract manufacturing iv. 8 billion. Licensing is expensive and it requires process like agreement & It is similar as Franchise Operation. View Test Prep - licensing and franchising from ECONOMICS 12 at Xavier Institute Of Management & Research. A number of foreign market entry modes exist, including: exporting, licensing, franchising, joint venture and wholly owned subsidiary. Firms can pursue them independently or in conjunction with other entry strategies. . Licensing An arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period of time in exchange for. Licensing is a legal process in which one firm pays to use or distribute another firm's resources. What is Licensing and Franchising? Licensing is a contractual agreement in which one company provides another company in foreign country access to its patents, trade secrets, or technology in exchange for a fee known as a royalty. Franchising is a contractual arrangement in which the franchisor provides a franchisee the right to use its name and marketing and operational support in exchange for a fee and, typically, a share of the profits. CONTRACTUAL ENTRY STRATEGIES Two common types of contractual entry strategies are licensing and franchising. Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest. pdf from BUST 08009 at University of Edinburgh. It. Verified Answer for the question: [Solved] _____ is a fee paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset. In order to prevent a licensor-competitor from gaining unilateral benefit, licensing agreements should provide for: A) contract manufacturing. Franchising is a contractual arrangement in which the franchisor provides a franchisee the right to use its name and marketing and operational support in exchange for a fee and, typically, a share of the profits. 11). 3. Licensing concerns a product rights or the method of production marketing the product rights. 4 illustrates the nature of the franchising agreement A typical. cross-border exchanges in which relationship between focal firm and foreign partner is governed by explicit contract. Learn. Franchising suggests the use of a whole package of signature products and business solutions, whereas licensing allows entrepreneurs to leverage certain individual property and produce and. Licensing,. trading bloc c. There are five basic options available: (1) exporting, (2) creating a wholly owned subsidiary, (3) franchising, (4) licensing, and (5) creating a joint venture or strategic alliance (Figure 7. Find Flashcards. 6 Joint Ventures Chapter 8. D. 99/year Quiz 15: Licensing, Franchising, and Other Contractual Strategies. Expert Help. 5. Chapter 15 Licensing, Franchising, and Other Contractual Strategies 1) _____ is a fee paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset. Study with Quizlet and memorize flashcards containing terms like Licensing, franchising and other contractual strategies are considered _____ control strategies, Contractual Relationships between a focal firm and a foreign partner are, Intellectual Property refers to and more. 5Explain the advantages and disadvantages of franchising. 4. E) adaptation for local. When the executives in charge of a firm decide to enter a new country, they must decide how to enter the country. Options for CONTRACTS include co-marketing, R&D contracts, turnkey project, strategic supplier/distributor, licensing/franchising. when the franchisor has been successful domestically because of unique products and advantageous operating procedures and systems. Franchising is an advanced form of licensing in which the the franchisor allows the franchisee, the right to use an entire business system in exchange for compensation. Learn. B) An Indian automobile manufacturing company, buys engines from a Japanese manufacturer for its. One could say that franchising is a special type of licensing arrangement inContractual Entry Modes A company can use a variety of contracts such as : licensing, franchising, management contracts, and turnkey projects to market highly specialized assets and skills in markets beyond its nation’s border. Contract Manufacturing: - This entry mode is a cross between licensing and investment entry. Staffing leverage . Aspect Franchising Licensing; Definition: Franchising is a business model where a franchisor grants a franchisee the right to operate a business using the franchisor’s brand, systems, and support in exchange for fees and royalties. 6. A license is much more limited than a franchise. ,. Verified Answer for the question: [Solved] The reputation of a licensor will be jeopardized by a licensing agreement if the licensee _____. Exporting. Franchising: Arrangement in which the firm allows u000banother the right to use an entire business system in u000bexchange for fees, royalties or. Mode Characteristics Advantages Disadvantages. Quiz 15: Licensing, Franchising, and Other Contractual Strategies. , Contractual alliances include all of the following except: a. International Business: The New Realities, 5th Edition caters to a post-millennial student audience, the most diverse and educated generation to date. The Franchiser maintains significant control of, or provides significant assistance to, the franchisee’s operation methods. Flashcards; Learn; Test;Exporting. The licensor provides no technical support or assistance in most cases. Verified Answer for the question: [Solved] _____ is the world's leading licensing firm, with $56. Fast entry, low risk. Franchising. Study with Quizlet and memorize flashcards containing terms like contractual entry strategies in international business, intellectual property, intellectual property rights and more. Flashcards. It is where a person (franchisor) who has developed a certain way of doing a business gives another. Global Market Opportunity Assessment IV. 7. Exporting. Expert Help. Click the card to flip 👆. In Licensing agreement and franchise, an overseas-based business will pay you a royalty or commission to use your. It reduces risks for both parties. View Any. In addition to the standard license process, a company will assist in establishing the business with the design, equipment, organization, and marketing. Quiz 15: Licensing, Franchising, and Other Contractual Strategies. Because first mover advantage has been shown to result in better performance in emerging markets Marinov and Marinova 1999, Luo and Peng 1998, a firm may chose licensing as an expeditious entry strategy to gain the first mover advantage and create barriers for subsequent entrants. 13 8. Similar to a licensing agreement, under a franchising Granting rights on an intangible property, like technology or a brand name, to a foreign company for a specified period of time and receiving a royalty in return. Brand owners lease their patents, software, or characters to other companies. They generate a consistent, stable level of earnings from foreign operations. Created by. Licensing is an arrangement by which the owner of intellectual property grants another. Trademark LicensingCompanies which want to establish a retail presence in an overseas market with minimal risk, the licensing and franchising strategy allows another person or business assume the risk on behalf of the company. If you think of a franchisor (the brand) as a. An industrial design is intended to ________. Try it free3. Learn from your partner (and apply that knowledge within your organization) Study Chapter 5: Entry into Foreign Markets flashcards. develop, and manage the entire franchising network in its market and has the right to subfranchise to other franchisees, assuming the role of local franchisor. A franchisor may not enforce a terminable-at-will contract clause in a jurisdiction that requires good cause to terminate a franchise agreement—even if the franchisee’s attorney actively negotiated the contract and the franchisee is given the sameLearn Licensing, Franchising and other contractual strategies with free interactive flashcards. Licensing is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the license) in exchange for royalties, license fees, or some other form of compensation. Franchising allows franchisors to function effectively with a much leaner organization. The main difference between the two is the duration of the commitment involved. reduce local perceptions of the focal firm as a foreign enterprise Study with Quizlet and memorize flashcards containing terms like 1. Licensing. Test. Firms often combine franchising with other entry strategies.