At the same time, one of the most widely used strategies by large companies is licensing, which is often confused with franchising. However, while they share certain characteristics, they are fundamentally different.
Licensing has been one of the primary mechanisms for expansion over the past three decades for multinational corporations. But what is its benefit? Why is this model so popular among this type of company?
The answer is clear: because it is modular, it allows the use of installed capacity from other companies, reduces risks, and best of all, based on my professional career as an advisor to these multinational corporations, in most cases, no money is needed to grow or expand since licenses are generated based on the strengths each organization has developed.
The main benefit is that various parts of the business can be licensed, such as branding, production, distribution, commercialization, etc. Licensing is considered a more sophisticated approach compared to the traditional franchise model, where you are given an established business to operate.
The global leader in licensing is Disney, and Marvel has made licensing a key pillar of their business models, generating billions in royalties by allowing other companies to use their characters and franchises in products like toys, clothing, and video games.