Which of the following statements is true about licensing and franchising?
A) They involve setting up a fully operational, independent entity in a foreign country to conduct business.
B) Unlike franchising, licensing is used by service firms such as hotels and fast-food chains.
C) Like franchising, licensing is a high-cost means of market entry.
D) The most important risk involved with licensing is the potential loss of proprietary advantage.

Question

Quizplus · Accepted Answer

Licensing involves granting a foreign company the rights to produce and sell one's product or to use one's technology in exchange for a fee or royalty. The most significant risk in this arrangement is the potential loss of proprietary advantage or intellectual property, as the licensee might not adequately protect the licensed asset or could even become a competitor.

Which of the Following Statements Is True About Licensing and Franchising