Final answer:
A licensing agreement allows a company to use a brand name and have the freedom to handle advertising as they prefer. This arrangement is advantageous for businesses that want to leverage brand recognition while maintaining flexibility in marketing strategies.
Step-by-step explanation:
When you enter into a licensing agreement, you are paying for the name but have the freedom to do what you want with advertising. This type of agreement allows companies to capitalize on established brands without the constraints that often come with franchising or direct ownership. An example is a business that purchases the rights to use a popular brand name on their products, but then develops its own advertising campaigns to suit its target market and business strategy.
Naomi Klein's 1999 text, No Logo, critiques the way companies use branding and advertising in the global market. Yet, even with the criticisms, licensing agreements persist as a method for companies to extend their brand's reach. With these agreements, businesses can tailor their advertising efforts as they see fit, while benefiting from the name recognition and consumer loyalty associated with established brands.