Risk with new products for business license#
An important one is that the owner of the license retains complete control over the product. There are subtle but key differences between franchising and licensing. The licensee makes the product and returns a percentage of the overall revenues to the outside company, usually in the form of royalties. The company can license its formula to a local producer, thus avoiding the regulations. Let’s say that a food snack manufacturer is prevented by a foreign government from competing against local sellers of food snacks. Licensing is a strategic alliance made by a licensor that allows a licensee to provide products or services under the licensor’s brand name. There are also increased transportation and tariff costs. But as with any international business, there are risks involved with interruptions in the supply chain and fluctuating foreign currencies. You also retain control over how the product is designed and produced. The main advantage of an export business is a wider market for the products, as importers can frequently sell goods below the price charged for domestic items. Both types of businesses are scrutinized by custom authorities and reported in various categories as part of a country’s gross domestic product. Both types of businesses create local jobs and so are generally favored by governments. Importing, the flip side, is bringing in goods from another country. This McDonald’s restaurant in Bydgoszcz, Poland, is one of nearly 30,000 McDonald’s locations worldwide owned and operated by franchisees.Įxporting is the shipping of goods from the domestic country to a foreign country.
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