What is the difference between a royalty and a fee?

Question

What will be an ideal response?

Answer 1

Royalties are payments made to the owners of a technology, a patent, or a trademark for the use of the technology or the right to manufacture under the patent or the trademark. As such, royalty payments are pure profits in the sense that the firm receiving them performs no current services and incurs no current costs to receive the payment. Thus, royalties can be a substantial source of income for the firm that is receiving them.
Parent corporations also assess fees for the services they provide to their affiliates, including management and technical consulting services and fees to recover overhead costs associated with day-to-day operations the parent performs for the foreign affiliate. These costs include the foreign affiliate's share of the research and development of the organization, its share of legal and accounting costs for the entire enterprise, its share of the salaries of the general corporate management, and other costs, such as general corporate advertising and public relations. Often, the fees associated with the parent's overhead are based on the affiliate's sales. In other circumstances, the overhead charges are based on a pro rata sharing of all the MNC's fixed costs.