Licensing
Granting right to use intellectual property/brand/technology.
Formula
Licensing Revenue = Royalty Rate × Licensee Sales
Real World
McDonald's uses franchising (a form of licensing) to operate in over 100 countries, allowing local operators to use its brand and systems in exchange for fees and royalties.
Exam Focus
Identify who benefits and how in any licensing question — the licensor gains revenue and reach; the licensee gains an established brand and reduces risk.
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