Licensing as a way to enter the Czech market has all but disappeared since 1997, although franchising remains a healthy alternative (see below). Banks, hard hit by bad debts in the late 1990s, became stricter with their lending practices in 1999, a trend that showed signs of easing in 2004 and in the first three quarters of 2005, but only gradually, despite substantially lower financing costs. Foreign firms are reluctant to license the transfer of technology and know-how because of fears that much of the production will end up on the black market, since the intellectual property laws that are in place lack enforcement mechanisms.
In addition, investment-incentive programmes encourage firms that might consider a licensing agreement to set up their own operations. Many Czech firms that were producing under licence agreements have abandoned this strategy in favour of making their own goods and not paying licensing fees. For example, Elitex Machinery dropped its licensing agreement with Volkmann (Germany) in September 1999 and now produces textile machinery on its own.

Licensing is used most often for household goods, food and beverages, and motorcars. The government is keen to develop environmental and power-generating technologies, and it welcomes technology transfer in these industries. In most areas, however, authorities tend to favour direct investment and joint-equity ventures over licensing arrangements. One of the few sectors to continue to use licensing is the brewery sector. Interbrew, the Belgian owner of several Czech breweries, began using one of its facilities in Prague to brew Amstel, a Dutch beer, under licence. Interbrew had already been brewing Asahi, a Japanese brand, in Prague, taking advantage of unused production capacity.

Although licensing has slowed, franchising has taken off, especially in retail operations. There were 90 foreign franchises operating in the Czech Republic at end-2004, and around two dozen local Czech franchise operations were operating as well, according to the Czech Association of Franchises (CAF). The CAF reports that 1,450 franchise stores were operating in the Czech Republic in November 2005, up from just 130 in 1999. Dominating the scene are big multinationals such as McDonalds, KFC, Bauhaus, Tesco, OBI and Baumax. The CAF expects the market to grow to about 300 franchisesa number similar to neighbouring Austriaby 2009. The CAF says that on average, franchising contracts in the Czech Republic run 22.5 years, with the initial investment by the franchisee ranging from as little as Kc10,000 to Kc15m. In the extreme case of OBI, a German do-it-yourself retailer, that cost can rise to Kc200m. Once the operation is up and running, franchise fees usually run 17% of a stores annual sales.