In determining a royalty rate, the use of gross sales is generally favorable to the licensee, while net sales favor the licensor.

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In determining a royalty rate, the use of net sales is generally favorable to the licensee as it deducts expenses from the total revenue, resulting in a lower royalty payment. Gross sales, on the other hand, are the total revenue generated without any deductions, which means a higher royalty payment for the licensor.

In Determining a Royalty Rate, the Use of Gross Sales