The recent incident in Suez Canal has highlighted how interconnected our commerce has become. Expanding your business operations internationally can be a wise financial move, but it isn’t without its risks. That’s why you need to understand how to negotiate agreements that further your business interests while protecting those interests in both the short- and long-term.
Utilizing licensing agreements in an international context
You may be able to accomplish this, at least in part, by utilizing licensing agreements. In its simplest terms, a licensing agreement allows you to give an international company the right to produce, market, and sell your goods in that international region in exchange for a fee. This can be a relatively easy way to expand your market reach without having to make a large commitment overseas. In many instances, licensing is a way to test the international waters before branching out fully.
One of the biggest advantages to utilizing licensing agreements is that it can help alleviate a lot of costs. For example, you can avoid shipping costs that can quickly accumulate and you can avoid export taxes. You also won’t have to dump resources into building physical locations and engaging in active marketing abroad, which can save you a lot of time, money and energy.
Know what business approach you want to take
Licensing can be a great tactic to grow your business, but you still need to be careful. The terms of such an agreement need to be favorable to you and your business, and you’ll want to make sure that you’re doing business with an international business who is committed to your product’s success, yet won’t become a major competitor in the future. You’ll also want to take steps to protect any intellectual property tied to your business.
And licensing might not even be the best option for you. By exporting your products you can retain more control and potentially see more profit on the backend, but it might take more time and energy.
The key thing to remember is that you have options that are worth exploring before deciding on any one course of action. Attorneys like those at our firm have decades of experience handling legal issues pertaining to business and shipping, and they stand ready to help you find the best path forward for your business.