What is a percentage of actual sales paid by a licensee to a licensor called?

• A. Agglomeration
• B. Prestige
• C. Born Global Company
• D. Royalties

Answer: (D)

In licensing, the amount a licensee pays the licensor as a share of sales is called royalties. This ongoing payment is typically a percentage of actual sales or revenue generated from the licensed product, property, or technology. Royalties align incentives so the licensor benefits from higher sales, while the licensee only pays when there is actual activity. They can be a simple rate, or tiered with volume, and may include adjustments like minimum guarantees, but the core idea is a percentage of sales paid to the licensor.

The other terms don’t describe this payment arrangement: agglomeration refers to geographic clustering of firms, prestige is about brand image or perceived status, and a Born Global Company describes a firm that internationalizes quickly.