- Revenue Generation: They provide a source of revenue for licensors without the need for direct involvement in production or marketing. - Risk Mitigation: They allow licensees to reduce the risks associated with developing new technologies or entering new markets. - Market Expansion: They enable licensors to expand their market reach through the licensee’s distribution networks. - Focus on Core Competencies: They allow both parties to focus on their core competencies, such as innovation for the licensor and marketing for the licensee.