Licensing agreements reduce the risk for manufacturers and sometimes even remove the requirement for a manufacturer to produce its own product.

Question

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Licensing agreements allow a manufacturer to grant permission for another party to use their intellectual property, such as a trademark or patent, and produce the product on their behalf. This can reduce the risk and cost for the manufacturer, as they do not have to invest in production facilities or take on the financial risks of producing and selling the product themselves.

Licensing Agreements Reduce the Risk for Manufacturers and Sometimes Even