Licensing is considered to be the easier way of expanding globally due to following advantages:
(i) Under the licensing system, it is the licensor who sets up the business unit and invests his/her own money in the business and the licensor has to virtually make no investments abroad. Licensing is, therefore, considered a less expensive mode of entering into international business.
(ii) Licensor is paid by the licensee by way of fees fixed in advance as a percentage of production or sales turnover and licensor does not bear risk of losses.
(iii) Since the business in the foreign country is managed by the licensee who is a local person, there are lower risks of business takeovers or government interventions.
(iv) Licensee being a local person has greater market knowledge and contacts which can prove quite helpful to the licensor in successfully conducting its marketing operations.
