Exporting, licensing, and franchising are three low-commitment modes of entering foreign markets. Exporting involves selling goods produced domestically to foreign buyers. Licensing grants a foreign firm the right to use intellectual property. Franchising licenses an entire business system and brand.
Exporting vs Licensing vs Franchising When a company first enters international markets, it often chooses a low-commitment mode — one that requires minimal capital investment and limits downside risk. The three most common low-commitment entry modes are exporting, licensing, and franchising. Each works best for different types of businesses and involves different trade-offs between control, risk, and return. Key Takeaways All three modes require low capital investment compared to FDI . Exporting