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What Is The Difference Between A Franchise Agreement And A License Agreement

While licensing agreements can be developed and implemented quickly and cheaply for a Brand-Comma, franchising agreements do much more work. Both franchising and licensing are legitimate ways to grow your business, but first you need to weigh several factors, take a look at where you are on your business trip, and decide what your goals are before deciding whether franchising or licensing is the right choice for you. These features are precisely the reason why Pizza Hut/Dominos cannot enter into a licensing agreement with an interested party and may allow them to use their name to sell their own pizza recipe. For these niche companies, the value of the brand is at stake after years of struggle. They therefore enter into a franchising agreement; allowing other people not only to use their name, but also to learn technical know-how, art, skill and knowledge, to make the product exactly as they would in exchange for royalties. At the other end of the spectrum is the license model; where you pay for the use of intellectual property, but you are free to run your business the way you want. The brand that licenses you may specify for which its intellectual property should be used, but it does not provide you with any support such as Site Selection-comma; training-comma; Marketing or any of the other support systems you like if you are part of a franchise system. A licensing agreement is a contract in which the donor gives the taker permission to use something without transferring ownership. Licensing agreements are most often used for intellectual property, such as licensing. B of a brand, logo or brand. If you have a loyal customer base, a constant high demand for your product and the capital needed for a successful expansion strategy, it`s time to choose the extension model with which you control your relationships with your business partners.

Licensed or franchised? Here at FranNet – comma; we firmly believe that franchising is the way forward. The amount of help you get from a deductible is priceless. FranNet can help you find the perfect franchising opportunity. If you think you`re ready to take this first step towards Business Ownership-comma; Sign up today for a free FranNet search and franchise advice. Remember that even if you and your business partners consider your agreement to be a licensing agreement, if you meet the most important criteria, the ACCC must consider you a franchisor and abide by the Franchise Code of Conduct. For franchisors, franchising allows them to expand their business for less investment than to open new sites themselves. Other benefits of franchising are the fact that you know what the business looks like if it succeeds, and you can often take advantage of economies of scale in your relationships with suppliers and suppliers. Although both parties have similar advantages, licensing can be characterized as a subset of franchising; In other words, a typical franchising agreement would involve many licensing agreements to transfer the use of intellectual property rights. Franchising is a much broader concept because it involves a greater degree of control by the franchisor.

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