The purpose of a royalty in business is to ________.

The purpose of a royalty in business primarily revolves around providing a steady stream of income for license holders. In various industries, particularly in franchising and licensing agreements, royalties serve as a payment structure that allows the licensee to use certain intellectual properties, such as trademarks, patents, or brand names, in exchange for recurring fees based on usage, sales, or revenue generated. This arrangement ensures that the owners of the intellectual property receive ongoing financial benefits from the continued success and proliferation of their brand or invention, promoting a mutually beneficial relationship between the license holder and the licensee.

Understanding this function is crucial, as it underscores the economic dynamics within franchises and licensing deals. License holders rely on these royalties to sustain their businesses and support further development and marketing efforts, ensuring that they remain competitive and continually evolve.