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).

1. International Business

2. Prepared By
Manu Melwin Joy
Assistant Professor
Ilahia School of Management Studies
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com
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3. Licensing
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).

4. Licensing
The major drawback of
licensing is the problem of
controlling the licensee
due to the absence of
direct commitment from
the international firm
granting the licence. 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 lose
that market.

5. Advantages of Licensing
A license allows the
licensee to use, make and
sell an idea, design, name
or logo for a fee. They are
advantageous for
licensors because they
allow them to expand
their business’ reach
without having to invest
in new locations and
distribution networks.

6. Franchising
Franchising is a business model
in which many different
owners share a single brand
name. A parent company
allows entrepreneurs to use
the company's strategies and
trademarks; in exchange, the
franchisee pays an initial fee
and royalties based on
revenues. The parent company
also provides the franchisee
with support, including
advertising and training, as
part of the franchising
agreement.

7. Advantages of Franchising
Owning a franchise allows
an individual to be self-employed
while also
investing in a proven system
with training and support. It
brings a ready-made
customer base and often
comes with client listings.
There is a reduced risk of
failure, on-going research
and develop, and a semi-
Monopoly in a certain
territory.

8. Licensing & Franchising
Licensing is similar to
franchising except that
the franchising
organisation tends to be
more directly involved in
the development and
control of the marketing
programme.

10. Example
ITC Hotels and ITT
Sheraton corporation had
an agreement under which
ITC Hotel’s Welcom group
franchised two of its hotels
in Bangkok and Hong kong
to ITT Sheraton holding, in
exchange, the franchise for
Sheraton in India. Later,
partners decided to set up
a joint venture with
Sheraton having major
stake to manage all new
ITC hotel projects in India.

11. Example
• Examples of franchises
include McDonalds,
Subway, 7-11 and Dunkin
Donuts.
• Examples of licenses
include a company using
the design of a popular
character, e.g. Mickey
Mouse, on their
products.