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1. It is always advantageous for a business firm or nation to trade with other regions or other countries. When firms trade with regions it is somewhat easier. But when they trade with other nations, it is not an easy venture.
2. It is mere difficult to manage international business operations due to variations in the political, social, cultural and economic environment that differ from country to country.
3. Thus, the best way to expand is to give business name to the local business firm of a particular country without making any investment and charge certain kind of fee or royalty or fixed percentage from him.
4. In this case, the entire risk is borne by that business firm who is entering into the contract to sell the products in its own country. The original producer has nothing to worry about losses.