Difference Between Licensing Agreement And Franchise

At the most basic level, the difference between a franchise and a license is the amount of support you can expect. A franchise system helps you select location & comma; Training , marketing and many more , while a licensing agreement offers you little or none of this. Some states are considered duty-free registration states, which means that the franchisor must register its franchise disclosure document before selling a franchise in that state. These states often have additional complementary laws required by the franchisee. While all franchisees benefit from federal protection laws, those in duty-free registration countries benefit from an additional layer of protection. Franchise registrars understand that licensing agreements are often used between a current business owner and a brand when the owner wants to expand a product line and that lack of support is not a big deal. In general, a franchise agreement is a much stricter and more complicated agreement. There are many moving parts of a franchise agreement in which a license agreement is a simple loan of protected trademarks or images. The main feature of franchising licensing is restrictions. A license only grants access to the use of certain protected trademarks, that`s all. While this limits the deal, it could be all your business needs. It is also important to enter into a licensing agreement to ensure that you have taken these steps to protect your intellectual property. In a licensing model, you pay for the use of intellectual property, but you can run your business as you please.

The brand from which you license may describe in detail how its ownership can be used, but it does not provide any business model or support as you would get from a franchisor. To grow your business, you don`t need to grow everything yourself. With a franchise or license agreement, you can recruit other contractors to help. If you cross, you allow someone else to open a store or restaurant – for example McDonald`s – on your model. A license agreement allows another company to use your trademarks and logo. Normally, licensees are not as tightly controlled as franchisees. One of the disadvantages for a franchisee is the loss of control. While it`s your business, most important business decisions are made or at least need to be approved by the franchisee. While this help can be beneficial for learning the ropes of the business, one can also feel like you are being micro-exploited by experienced business owners. However, this control is a professional for the franchisee, as they can still dictate how their brand is used.. .

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