| When considering buying a business franchise, it is | | | | which a parent company (the franchiser) grants |
| important to consider opportunities abroad as well | | | | another independent entity (the franchisee) the |
| as in the domestic market. For this reason, it is | | | | right to do business in a prescribed manner. This |
| highly advantageous for the potential franchise | | | | right can take the form of selling the franchisor's |
| buyer to familiarize himself with the international | | | | products, using its name, production and |
| franchising and licensing market.Franchising and | | | | marketing techniques or general business |
| licensing involve a minimal commitment of | | | | approach. One of the common forms of |
| resources and effort on the part of the | | | | franchising involves the franchisor supplying an |
| international marketer, and are easy ways of | | | | important ingredient for the finished product.The |
| entering the foreign markets. Under international | | | | major forms of franchising are |
| licensing, a firm in one country (the licensor) | | | | manufacturer-retailer systems, |
| permits a firm in another country (the licensee) to | | | | manufacturer-wholesaler systems and service |
| use its intellectual property (such as patents, | | | | firm-retailer systems. International franchising |
| trademarks, copyrights, technical know-how and | | | | licensing agreements have grown very |
| marketing skill).The monetary benefit to the | | | | substantially. As an entry strategy, franchising and |
| licensor is the royalty or fees that such a licensee | | | | licensing requires neither capital investment nor |
| pays. In many countries, the government | | | | knowledge and marketing strength in foreign |
| regulates such fees or loyalties. These feeds do | | | | markets.Another advantage of franchising is that |
| not exceed five per cent of the sales in many | | | | it may be employed as a pre-emptive strategy |
| developing countries. A licensing agreement may | | | | against competitors by combing the foreign |
| also be one of cross licensing, wherein there is a | | | | markets before the competitors is able to enter. |
| mutual exchange of knowledge and/or patents. In | | | | In addition, franchising has been used by many |
| cross licensing, a cash payment may or may not | | | | companies to harvest their obsolete products. |
| be involved.Franchising is a form of licensing in | | | | |