Royalties play a crucial role in business for several reasons:
Revenue Stream: They provide a continuous revenue stream for the licensor, enabling them to monetize their intellectual property without directly producing or selling products. Expansion Opportunities: For the licensee, royalties allow them to expand their product offerings and markets by leveraging established brands or technologies. Risk Management: They help distribute the risk between the licensor and licensee, as the licensee can access proven products or technologies, while the licensor can benefit from additional income without the need for significant investment.