How Does A Franchise Differ From A Licence Agreement

April 10, 2021

While franchising and licensing have similarities, these are two very different agreements that mean different things to you and your brand. In this franchise against the comparison of licenses, we explain the differences between the two, as well as the pros and cons of each. Disney`s main competitor, Warner Bros., also derives significant revenue from the IP range it owns, with DC Comics offering massive licenses for toys and clothing. Even the magical world of Harry Potter is the result of a licensing agreement. As Warner Bros. does not own theme parks, it has decided to grant its amusement parking rights to Universal Studios to take advantage of the Harry Potter IP. Compared to franchises, another positive aspect of a license is the simplicity of the agreement. Since the licensing agreement only covers the use of one (or a few) protected trademarks, the agreement will be fairly simple and simple. In the most basic terms, the biggest difference is the amount of help you get. With a franchise, you`ll probably get support in the areas of training, marketing, site selection and other areas, while a licensing agreement offers little or no support. Learn more about these two business models so you can pick up the right choice. Every company has its potential challenges.

If you look at the difference between franchising and licensing, add the pros and cons of your situation, goals, personality and products. Don`t forget to consider the resources you have when making your decision. A license is a limited legal relationship. A franchise is a broader legal relationship that involves a license. If your goal is to expand and develop your brand through additional outlets or service spaces, then franchising is the right legal model and licensing is not an alternative. Learn more about licensing vs. Franchising, you`ll find the guide. To learn more about converting your license system to franchise, click here. To learn more about franchising your business, click here. Some business opportunities offer the best of licensing and franchising.

They offer tools or training to help you start your own business, but usually at a lower cost and with fewer restrictions than a deductible. To expand your business, don`t need to grow everything yourself. With a franchise or licensing agreement, you can recruit other entrepreneurs to help. If you franchise the franchise, you allow someone else to open a store or restaurant – McDonald`s, for example – on their model. A licensing agreement allows another company to use your trademarks and logo. Licensees are not normally subject to as strict controls as franchisees. Two of the most well-known brands that manage licensing agreements are Disney and Calvin Klein. Franchises are regulated by the Federal Trade Commission franchise rule and must comply with state laws. Under the franchise agreement, the franchisee pays a fee to the franchisor to open a franchise, use its brand and for advice and business assistance. The franchisor lends its brand for a fee and offers the franchisee training and know-how. When creating a franchise, there are many more legal barriers and regulatory requirements that need to be met than with a licensing agreement. The main order for franchising licensing are restrictions.

A license only gives access to certain protected brands, that`s all. This makes the agreement limited, but it could be all you need in the business. It is also important that you enter into a licensing agreement to ensure that you have taken these steps to protect your intellectual property. Another difference between the franchise and the licensing is the extent of the control that the seller can exert over the buyer. The search for a franchise in Canada can be overwhelming…