Licensing is a method of entering a foreign market (a form of Joint Venturing) in which a company (licensor) enters into an agreement with a licensee (licensee) in the foreign market. The licensor offers the right to use a production process, trademark, patent, trade secret or other valuable information in return for a fee or royalty.
Licensing is a simple way of entering with minimal risk and capital expenditure. The main risk for the licensor is the potential loss of control over the production process and quality, as well as the possibility that the licensee will become a competitor after the contract expires.
