A licensing agreement:
A) results in two firms agreeing to share the risks and the resources of a new venture.
B) is best way to protect proprietary technology from future competitors.
C) allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country.
D) can be greatly impacted by currency exchange rate fluctuations.

Question

Quizplus · Accepted Answer

A licensing agreement allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country. This can be beneficial for both parties as it allows the licensor to expand their market without incurring significant costs or risks, while the licensee gains access to proven technology or products. The other choices may also be true in certain cases, but they are not the primary purpose of a licensing agreement.

A Licensing Agreement