A franchise is an authorization granted by a company to sell or distribute its goods or services in a certain area. It is basically an extension of an existing brand. If you become part of a franchise, you follow the operating systems, you can leverage on the business name, this means you can use the brand name, and you get access to all the support from the brand. Bear in mind that the franchisor still has ultimate control of the brand and how it is operated.
When you gain a franchise, you use your money to set up the business but the franchisor provides the “manual” of how the business is run. Licensing, on the other hand, is an official permission that allows you to run your business. You pay for the intellectual property and you are free to run the business the way you like. However, you do not get the benefits and support associated with a franchise since you are independent and not under the “control” of any brand.
Franchising and licensing are two different things, but some people may get confused because they seem similar. Franchising will allow you to get a business, provide the support that you need to check the sites, undergo training, and so much more. Licensing will not provide you with any of that.
If licensing would be related to business, you would need to register your business and make sure that it passes all of the requirements so that you can get the license that you need to start your business. With a franchise, you will have little control of the brand and the corresponding licenses. For a license, you can decide on the things that you want to do with it.
Franchising is a technique to enhance your business once it has been proven and has its value in the market. When you agree to give your franchise to others, that means you are safeguarding that they have the essential skills to operate branches of your business. An example of franchising business is McDonald's, which has grown its business through franchising.
Licensing is a settlement between two parties, where one party agrees to allow other parties to use their intellectual assets. Licensing is also the base of franchising. Licensing is governed by contract law, while franchising is regulated by securities law. Registration of licensing is not required. Registration of franchising is needed.
There are some brands that are able to grow because of franchising. This usually happens when a brand is popular and other people would like to offer the brand to a completely different place through a franchise. The products and services of the company will become available through the use of a dealer. Big companies allow their products and services to become available through franchising.
Licensing is the process wherein there is a business arrangement between two companies will become available. Usually, one company will sell the other company’s products or services in exchange for a commission. There are some companies who may also collaborate with each other so that they can both improve their sales.
Many brands are able to grow through acts of licensing and franchising. Franchising occurs when the business owner distributes their product or service through dealers. These dealers are most commonly referred to as franchisees. Examples of franchising organizations include Subway, 7-11, and McDonalds. The franchisee will put up the capital of the business and help promote it.
Licensing is a business arrangement between two companies. One company allows the other to manufacturer the product or service, in exchange for payment. There are various types of business licenses that can be obtained such as patents, copyrights, designs, property, and trademarks.