Whats the difference between a licence and franchise. Licensing vs franchising self help learning notes edurev. In such a situation, the licensor needs to either a. Elements of a franchise a franchise has been described as a license on steroids. You get back to your office, download the program and typically you agree to the terms and conditions for the use of such accounting software a license. On the other hand, franchising is a more complete arrangement. At the other end of the spectrum is the licensing model, where you pay for the use of the intellectual property, but you are free to run your business. Franchising is based on a marketing concept which can be adopted by an organization as a. The difference between licensing and franchising can be drawn clearly on the following grounds. Franchising vs licensing is often the tough question potential wouldbe business owners ask themselves, as both are popular business models. Licensing when considering which model will work best for your business you need to consider the nature of your business and what degree of control you need over your ip or brand when it is. Both the positive aspects and the lacunas associated with licensing are substantially discussed further in this paper.
In return for use of the brand name, proven systems and support, the franchisee pays the franchisor a royalty fee. Difference between licensing and franchising praxis. A franchise model requires the implementation of a uniform franchise. Used by businesses across the world, these two models carry their own sets of advantages and shortfalls. Store, manage, and share files online with instant. This document is highly rated by self help learning students and has been viewed 190 times. Difference between licensing and franchising the hallmark of a franchise is the nature and extent of the control that a franchisor exerts over the operation of a franchisees business.
Like a licence agreement, a franchise agreement is also a type of contract. However, some people still think that franchising and licensing are almost the same and have no specific difference. Often, the difference between a licence and a franchise comes down to whether. Nov 19, 2016 what is the difference between franchising and licensing.
Nov 19, 2016 apr 24, 2020 licensing vs franchising self help learning notes edurev is made by best teachers of self help learning. The fundamental difference between franchising and licensing is that in licensing, the small business owner doesnt relinquish as much control over their business as with franchising. The broad scope of the franchise laws may apply to a distributorship or license relationship resulting in an unwitting breach by a business owner of federal or state franchise and business opportunity laws. Certainly no licensor expected to end up defending franchise allegations. In its simplest form, a licence is where a person called the licensor owns or has rights. Below is the top 5 difference between franchising vs licensing. International marketing is the export, franchising, licensing or full direct entry of a marketing organization into another country.
What is the difference between licensing and franchising. Licensing and franchising class 11 business international. In all, this is an excellent presentation of franchising invaluable to anyone currently in a franchise. Aug 12, 2017 the difference between licensing and franchising can be drawn clearly on the following grounds. Learn more about comparing two pdf files start comparing your files with our free. More competitive the markets are the more is the burden on these business organisations to ensure that they. Holmes northern california office s outhern california office 555 chorro street, suite d2 6621 pacific coast hwy. Pdf tools does not include pdf xchange editor plus. In a nutshell, a franchise is a license wherein the licensor controls the licensee and benefits from that cont. But there are many more types of franchise businesses. Jan 16, 2017 the fundamental difference between franchising and licensing is that in licensing, the small business owner doesnt relinquish as much control over their business as with franchising. May 12, 2010 this guide discusses some of the differences between a simple license and a franchise. Pdfelement standard vs pdfelement pro pdf editor software. Those fees generally include a flat amount to join the franchise.
Jan 28, 2017 how do i know if i am licensing or franchising. In order to understand the difference, it is necessary to understand exactly what a licence and a franchise are. In addition to franchising, there are two other popular methods by which businesses expand their market and distribution channels. Get your kindle here, or download a free kindle reading app. The main differences are summarized in the following table. Cal suites may also provide pricing thats more attractive than licensing the equivalent components individually. Despite the title, the book is more about franchising than licensing. If you continue browsing the site, you agree to the use of cookies on this website. Franchisees have a right to use the name, brand, and business system of a franchise. Well give you an overview of the two concepts, along with the pros and cons, so you are well equipped to make the right decision.
You should refer to that page for a definition and application of the terms. Its easy to become confused between franchising and licensing because on the surface they sound remarkably similar. What is the difference between franchising and licensing. Licensing the core client access license cal suite and. Click select file at right to choose the newer file version you want to compare. This can be achieved by exporting a companys product into another country. Franchising is a type of licensing that goes beyond use of a specific product or branding and encompasses your business model. Jul 10, 2017 franchising also has the oversight of the federal trade commission, in addition to state and local laws regarding franchising. Difference between licensing and franchising with comparison. Licensing and franchising abstract every business organisation has its own strategy of survival and growth in the market depending on the kind of business environment it is being operating.
Often we are asked what is the difference between a franchise and a licence. This is a complex area of the law that requires a legal professional. Jan 07, 2011 difference between franchising and licensing large companies have both the models to offer to a person who wishes to be liked with them. The obvious advantages of licensing over franchising include reduced legal costs, reduced accounting and auditing costs, no registration and approval of the license program with any state, and quicker entry into the marketplace. Structuring licenses to avoid the inadvertent franchise by rochelle spandorf or any type of monthly fee based on gross receipts for the distribution or licensing rights. Hidden camera investigation on what really happens to your car cbc marketplace duration. Franchising on the other hand is often confused with the term licensing.
While there are certain advantages to embarking on a license program rather than a franchise program, there may also be the risk that the license program will be construed to be an illegal franchise. Dec 29, 2014 here is a quick look at the differences between licensing and franchising to provide a starting point in determining which option is best for your business. What is the difference between franchising, distribution, agency and licensing. What is the difference between a franchise and a licence. Freeware is any software that is distributed for use at a price of zero. The franchisor, being a business with a strong brand and a wellestablished and profitable business model, looks to replicate that model by franchising it to other people the franchisees.
Franchising vs licensing difference and comparison diffen. This guide discusses some of the differences between a simple license and a franchise. Licensing the license does not transfer ownership of the intellectual property, but merely gives the licensee the right to use it. A franchise is the agreement or license between two legally independent parties which gives. Yet, these situations arise with considerable frequency. Scribd is the worlds largest social reading and publishing site. This is most often seen in the soft drink or automotive industry. Pdf tools licenses include pdf xchange editor, and the pdf xchange lite printer.
Download now our 10 steps guide to find the right agent or distributor. Compare and contrast licensing, franchising, contract manufacturing, and outsourcing. Download this free guide provided by the internicola law firm, p. The franchisee is provided with a business in box, in exchange for a financial payment, not only. The owner of a business franchisor licenses to another. As you can see, the main difference between franchising and licensing. Many people think of fast food restaurants like mcdonalds, burger king, and wendys, when they think of franchising. There are, however, important differences between a licence and franchise agreement that you should understand. Structuring licenses to avoid the inadvertent franchise. Your system and written contract will determine whether you are a licensor or. Dec 15, 2014 difference between licensing and franchising the hallmark of a franchise is the nature and extent of the control that a franchisor exerts over the operation of a franchisees business. Difference between licensing and franchising praxis legal. Aug 26, 20 both the positive aspects and the lacunas associated with licensing are substantially discussed further in this paper. Licensing and franchising are sometimes used to mean the same thing, but there are differences.
The major difference between franchising and licensing. The difference between licensing and franchising is that licensing is a legal relationship that is limited in scope and relates only to the use of a trademark or. Difference between franchising and licensing compare the. What is the difference between franchising, distribution, ag. Determining the amount of control you want to have in a business is the key to choosing whether licensing or franchising is the right option for you. In all, this is an excellent presentation of franchising invaluable to anyone currently in a franchise relationship or contemplating such a relationship. But this is not the case, as franchising is totally different to licensing. Dec 23, 2008 there is a difference between licensing franchising and dealer networks. The benefits of franchising over licensing franchise law blog.
The advantages and disadvantages of franchising by david e. Unlike a licence agreement, franchise agreements will contain specific directions on how the franchise must operate. Learn vocabulary, terms, and more with flashcards, games, and other study tools. At the franchise institute, we encourage people to consider the two options carefully before they. What is the difference between a licence and franchise. Includes licenses to use property that is implicitly or explicitly protected by industrial. The broad scope of the franchise laws may apply to a distributorship or license relationship resulting in an unwitting breach by a business owner of federal or state franchise. The most distinctive feature of a franchise agreement is that a franchisor exercises significantly more control over franchisees than a licensor. It is classified as a wasting asset due to the finite term of the license. While there are certain advantages to embarking on a license program rather than a franchise program, there may also be the risk that the license program will be construed to be an illegal franchise if challenged by an unhappy licensee. Oct 04, 2017 licensing and franchising class 11 business international business 1 by anjali is an online education portal that provides interactive study material for students of classes. Used by businesses across the world, these two models carry. Most of the time when we hear the term franchising. Pdf xchange editor and editor plus licenses include the pdf xchange lite printer.
When you delve deeper, youll notice there are many key differences between the two, than can impact the manner in which your brand is used and how much control you have over it. The major difference between franchising and licensing we would like to take a minute to answer a very common question often asked. Differences between licensing and franchising marketinginsider. The major difference between franchising and licensing the. The economic impact of franchised businesses in the united states pdf. If you are a business owner, you may want to license the use of your brand or products to another business in order to gain more exposure for your company and earn revenue on the side. Whats the difference between a franchising and licensing model. In product trade name franchising, a franchisor owns the right to the name or trademark and sells that right to a franchisee. We will now turn to the differences between licensing and franchising. An intellectual property licence is an agreement that gives a licensee.
In licensing, another individual is buying the rights to use aspects of another companys branding, products, and trademarks in exchange for a percentage of. One advantage is that licensing costs much lesser in terms of the initial investment and ongoing charges. Outside of the context of franchising, licensing is addressed only in about a tenth of the book. Licensing and franchising class 11 business international business 1 by anjali is an online education portal that provides interactive study material for. After having clarified what these two concepts actually mean, one can also understand how licensing and franchising differ. Whats the difference between licensing and franchising. What is the difference between franchising and licensing in. Difference between franchising and licensing difference. Most of the time when we hear the term franchising it refers to business format franchising. It is in a franchises know value duplicable and transferable. All publications are available to download free of charge at. Licensing is an arrangement in which a company licensor sells the right to use intellectual property, or produce a companys product to the licensee, for a negotiated fee i.
As a business owner, one has to choose from the two models as to how he wishes to go ahead. Martin mendelsohn, franchising law, kluwer, 2004 business format franchising is a type of commercial relationship based on a contractual agreement between. If the answer is yes, then you have entered into a franchise agreement. Differences between licensing and franchising marketing. Franchising vs licensing differences between franchising. Apr 09, 2017 licensees are free to develop their own system for operating their business, such as by choosing the fitout for their storefront the franchisor monitors franchisee performance e. Franchising vs licensing top 5 best differences with infographics. Unlike a licence agreement, franchise agreements will contain specific directions on how the franchise. At the heart of franchising is the licensing of intellectual property in. First, its important to understand the difference between. Although there is some level of control with licensing, there is no control over marketing, training programs, etc. Large companies have both the models to offer to a person who wishes to be liked with them. Licensing, franchising, and other contractual strategies. Franchising and licensing are terms which describe very similar relationships but with stark differences.
A licensing arrangement can slip into an unintentional franchising structure if the licensing contracts are drafted poorly or if the licensor inappropriately controls the business operations of the licensee. A franchise is a license, though you usually dont find someone so focused on language minutia that they make a big deal out of the distinction in the sense of business opportunities. Licensing arrangements are governed by standard contract law so there are less administrative burdens than in a franchising arrangement. In contrast, a licensing arrangement allows a licensee considerable freedom in the operation of his or her business. The difference between licensing and franchising is, a licensee must be free to sell products or services in addition to those of the licensor, and may not be required to promote or advertise the licensor. This is because licensing is not subject to the ftc franchise rule. Franchising allows another business to replicate your entire company and business model in exchange for fees. Difference between franchising and licensing free quote. A franchise has been described as a license on steroids. When you opt to franchise, your franchisees are held to higher standards and you have more control over what they can and cannot do, especially when it comes to quality standards. Our web page licensing or franchising outlines the difference between licensing and franchising.
Licensing is an arrangement in international trade to have one company known as the licensor to allow another company known as the licensee to use its name, patents, brands, raw materials, and products for a fee or royalties. Licensing and franchising can be done both as a business owner and as someone looking to enter a specific market. What is the difference between a licence and franchise agreement. Pdf xchange pro is a bundle product that includes pdf xchange editor, pdf tools and pdf xchange standard.
1214 1240 505 713 1241 968 254 450 1507 947 216 968 719 48 2 1274 783 241 1378 577 225 78 1294 477 531 236 614 435 1467 1 1395 633 421 1044 517 1476 1025 995 494 51 761 1265 1184 531 952