Why is licensing important?
Protection for you. Ensuring your company is properly licensed helps to bring protection to yourself, your employees and your customers. Having the correct licence will ensure your personal assets are protected in case of a lawsuit as well as providing protection for you if your business is damaged.
What is the purpose of a local business license?
State business license: Essentially, a state business license is used to track and monitor businesses for tax purposes and are required for businesses to operate lawfully in the state. Most states have agencies specifically created to deal with issuing state licenses.
What are two advantages licensing?
The licensee gains the right to use your patented intellectual property (IP) for a fee (royalty). The licensee gains rights to utilize your trademark in connection with specific goods and services. The licensee gains rights to use material developed or created by a licensor.
What are the advantages of licensing agreement?
The advantages of licensing agreement include increasing market share, lowering capital requirements, increasing the return on investment, and decreasing financial and legal risks.
Do you need a business license?
Almost all businesses are required to have a license to operate legally. Some businesses require multiple licenses from federal, state, and local governments. If your business practices without the appropriate licenses, you may be liable for fines or other legal consequences.
What does licensing mean in business?
In business, licensing is a contractual agreement between two business entities where one company leases its intellectual property (IP) to another company under specific terms and conditions.
What are the cons of licensing?
Disadvantages of Licensing
- The licensor having loss of control of their intellectual property.
- The licensor having to depend on the skills, abilities, and resources of the licensee to generate revenues.
- The licensor being exposed to intellectual property theft by the licensee.
What are the advantages of licensing and franchising?
Licensing and franchising share a few similar advantages. Licensees also enjoy lowered risk because they’re usually entering the marketplace with a known quantity and a built-in customer base. However, they enjoy a lot more freedom than franchisees.
What advantage does licensing have over exporting?
The following are the main advantages and reasons to use international licensing for expanding internationally: Obtain extra income for technical know-how and services. Reach new markets not accessible by export from existing facilities. Quickly expand without much risk and large capital investment.
Why is licensing a popular strategy?
Companies with a strategic goal of increasing market share should consider licensing if they have a proprietary product that can be manufactured easily at a foreign location. Licensing provides an opportunity to rapidly increase the sales volume of a product.