What type of agreement allows firms to use proprietary technology of another firm?

What type of agreement allows firms to use proprietary technology of another firm?

• A. Franchising agreement
• B. Licensing agreement
• C. Management contract
• D. Export arrangement

Answer: (B)

A licensing agreement allows firms to use the proprietary technology of another firm by granting permission or a license for such use. In this type of arrangement, the licensor, who owns the patented technology, allows the licensee to utilize that technology under specified conditions, often in exchange for royalties or other forms of compensation. This legal permission facilitates collaboration between companies, enabling them to leverage each other's innovations and enhance their competitive advantage in the marketplace. In contrast, franchising agreements are focused on allowing a franchisee to operate a business model that includes not just technology, but also branding and operational support, which is broader in scope. Management contracts relate to the provision of expertise in managing operations, but do not typically involve technology transfer. Export arrangements merely deal with the sale of goods across borders and do not encompass the use of proprietary technology. Therefore, the licensing agreement is the most appropriate choice for the question asked.

A licensing agreement allows firms to use the proprietary technology of another firm by granting permission or a license for such use. In this type of arrangement, the licensor, who owns the patented technology, allows the licensee to utilize that technology under specified conditions, often in exchange for royalties or other forms of compensation. This legal permission facilitates collaboration between companies, enabling them to leverage each other's innovations and enhance their competitive advantage in the marketplace.

In contrast, franchising agreements are focused on allowing a franchisee to operate a business model that includes not just technology, but also branding and operational support, which is broader in scope. Management contracts relate to the provision of expertise in managing operations, but do not typically involve technology transfer. Export arrangements merely deal with the sale of goods across borders and do not encompass the use of proprietary technology. Therefore, the licensing agreement is the most appropriate choice for the question asked.