Blackwell Reference Online

Extract

In international business it is common for one organization to allow another to use its patented products, copyrighted processes, or trademarks in return for a royalty payment or fee. It is also possible for a multinational company to charge fees to its subsidiaries for use of the MNC's proprietary processes or products. This type of payment is usually treated as a franchise or other type of royalty (therefore, an expense to the subsidiary). In countries having restrictions on the flow of currency, the above arrangement may be a way of repatriating funds to the parent company (since funds flow as an expense instead of profits or dividends). See also licensing ... log in or subscribe to read full text