Licensing are governed by contract law, contract law are basically written agreements associated with exchange of goods and services, money, and properties businessdictionary, n. After having clarified what these two concepts actually mean, one can also understand how licensing and franchising differ. Licensing leaders dont need to become bookworms to start blazing a trail. Any journal, book, text, image, figure, photo, video, abstract, table, editorial comment, index or other publication. Well help you address issues at the outset before they become major problems. Licensing and franchising can be done both as a business owner and as someone looking to enter a specific market. As a marketer you try to build your brandso that your customers will know how toevaluate the intangible parts of your service. Providing effective advice in franchising depends upon accurately assessing the unique relationship between franchisors and franchisees. What is the difference between licensing and franchising. Prior to moving forward with franchising a business or licensing a business it is important to understand the differences and how each may have an affect on you.
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. In a franchising model, the franchisee uses another firms successful business model and brand name to operate what is effectively an independent branch of the company. Our franchising lawyers have a vast depth of skill in representing and advising domestic and international franchisors in all facets of their franchise operations. Ultimate guide to licensing examples and licensing. Gibson sheat is a member of the franchise association of new zealand. We assist both sides of the equation in franchising and licensing. Franchising your small business may be a good way to grow fast. Licensing and franchising franchising license free. Licensing a business concept seems like an easy way to grow a business, but as many entrepreneurs discover, maintaining a brands integrity through the. 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. Figuring out whether or not franchising will work for you is a matter of knowing your business and yourself. One downside to licensingfranchising is that the licensorfranchisor may lose control over how their technology and brand names are used. Our franchising lawyers have served as franchise counsel to many emerging and established regional, national and international franchisors in a variety of industries, including.
It also requires sound practical advice to manage the relationship. Franchising might be right for your business, but it is not your only option. Jul 03, 2015 this story appears in the july 2015 issue of entrepreneur. Licensing gives a licensee certain rights or resources to manufacture andor market a certain product in a host country. 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. This allows you to enter other markets and gain exposure that you may not otherwise get. Hello, i have worked as an executive assistant for an insurance restoration company for over 5 years and have bought into a franchise recentally and want to promote my services to. Franchising vs licensing difference and comparison diffen. The main differences are summarized in the following table.
Its easy to become confused between franchising and licensing because on the surface they sound remarkably similar. This story appears in the july 2015 issue of entrepreneur. When considering expanding a business both franchising and licensing are possible options. Two powerful ways to grow your business in any economy 4 by sherman, andrew j. Both licensing and franchising allow you to increase income through multiple revenue streams at relatively little cost to you. For example, paying a sum of money with signage of return agreements black and white, in return getting license to a company. Franchising vs licensing is often the tough question potential wouldbe business owners ask themselves, as both are popular business models. Content is well organized, well presented, relatively easy to understand. Licensing l for librarians l springer nature for librarians. 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.
Click here to request our free onehour webinar, alternatives to franchising. Copyright licenses detail the rights for publication, distribution, and use of research. A franchise is the grant of a license or a right from one party to another for the operation of a business in accordance with a business system. If you continue browsing the site, you agree to the use of cookies on this website. Franchising for growth, buying a business or franchise. Fully revised, completely updated, and still the definitive guide to these great business strategies. Licensing is a business agreement involving two companies. The franchiser maintains a considerable degree of control over the operations and processes used by the franchisee, but also helps. 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. 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. With an expansive offering of journals, books and databases, were confident. That is, license agreements cannot be used to create franchisetype relationships without the franchise regulation. Negotiate and complete deals for whole book rights, licensing and.
This webinar discusses in detail the various alternatives to franchising, their relative strengths and weaknesses, and their legal requirements. Knowing the differences between franchising and multilevel marketing also called mlm or network marketing is important when youre choosing the best business model for your background, financing and longterm goals. Difference between licensing and franchising praxis. Then there are the financial, bottomline considerations. In fact, both have other people marketing your product or service for you, and you are earning money while theyre doing it. Structuring licenses to avoid the inadvertent franchise. We represent a full range of franchisors, from startups to national and international franchise systems. Two powerful ways to grow your business in any economy. Franchising is a form of licensing in which a companythe.
The difference between licensing and franchising can be drawn clearly on the following grounds. How does franchising differ from licensing in australia. Underwoods business and corporate attorneys have extensive experience representing business owners in franchising their business. Also clients frequently question if licensing is better than franchising. Licensing is basically a method of distributing products and services, and may come in the form of a distributorship, an agency agreement, or a franchise arrangement. This is because licensing is not subject to the ftc franchise rule. In contrast, a licensing arrangement allows a licensee considerable freedom in the operation of. Despite the title, the book is more about franchising than licensing. While licensing relationships, without question, possess a legitimate purpose, they are extremely limited and cannot serve as an endrun around franchise regulation. Licensing, franchising, other contractual strategies study guide by anfieldcat includes 19 questions covering vocabulary, terms and more. Differences between licensing and franchising marketinginsider. Differences between licensing and franchising marketing.
In all, this is an excellent presentation of franchising invaluable to anyone currently in a franchise relationship or contemplating such a. In all, this is an excellent presentation of franchising invaluable to anyone currently in a franchise relationship or contemplating such a relationship. One downside to is that the licensorfranchisor may lose. It is usually best to follow the rule of thumb for federal licensing, which states if a federal government agency regulates the industry or business, a federal license or permit is needed. True one of the leading debates on entrepreneurship as discussed in our book concerns traits vs. For a company looking to expand, franchising and licensing are often appealing business models.
Selfarchiving or archiving in institutional repositories. Aug 12, 2017 the difference between licensing and franchising can be drawn clearly on the following grounds. We will now turn to the differences between licensing and franchising. Join doug ladd for an indepth discussion in this video, licensing or franchising, part of marketing foundations. This is a story that reaches back to the early days of the catholic church and affects.
You can start with a short list of easily accessible books that offer. Dec 23, 2008 while licensing relationships, without question, possess a legitimate purpose, they are extremely limited and cannot serve as an endrun around franchise regulation. This book is 100% applicable to defining, buying, selling, franchising a business or licensing business ideas. Quizlet flashcards, activities and games help you improve your grades. Franchise owners can use this book as a guide as they move through site selection, assemble their construction team and initiate their preopening steps. Franchising vs licensing differences between franchising. Licensing or franchising linkedin learning, formerly. The hallmark of a franchise is the nature and extent of the control that a franchisor exerts over the operation of a franchisees business. Discover book depositorys huge selection of franchising law books online. Franchising allows a company the franchisor to expand by granting other individuals or companies the franchisee the right to operate a copy of the franchisors brand and business methods in an area for a set period. 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. The license does not transfer ownership of the intellectual property, but merely gives the licensee the right to use it. The second volume of the basics of licensing series, this book expands on the various licensing topics examined in the first, but from the contrasting perspective. Each option however comes with different rules and regulations.
Franchising is an arrangement in which the franchisor permits. Should i franchise or license my business when you are ready to expand, you may investigate both licensing and franchising as possible directions for business growth, but it can get confusing as to how these options differ. Used by businesses across the world, these two models carry their own sets of advantages and shortfalls. Yet, these situations arise with considerable frequency. Becoming a franchisee is about entering into a relationship. Difference between licensing and franchising with comparison. Franchising is a business model that grew rapidly in australia and overseas during the twentieth century. In addition to franchising, there are two other popular methods by which businesses expand their market and distribution channels. Jul 10, 2017 franchising might be right for your business, but it is not your only option. An international business licensing agreement involves two firms from different countries, with the licensee receiving the rights or resources to manufacture in the foreign country. Everyday low prices and free delivery on eligible orders. In assessing this you need to consider if someone else using your ip or product in a manner you would not approve would.
Is a form of licensing in which a companythe franchiseragrees to provide a franchisee a name, logo, methods of operation, advertising, products, and other elements associated with a franchisers business in return for a financial commitment and the agreement to conduct business in accordance with the franchisers standard of operations. While franchising is perhaps the worlds most powerful growth vehicle, the entrepreneur considering growth options would be. A springer nature licence is available to academic institutions, governments and. Wiley authors must sign a license agreement before publication.
Many times i am contacted by a business owner who by all accounts has created a financially profiable licensing program but is faced with franchise violation claims. Because of this experience we can quickly identify the issues each party is likely to encounter going forward before they become problematic. What is the difference and how do you know if franchising vs. At the franchise institute, we encourage people to consider the two options carefully before they. If you are building or have built a brand in yourhome country that you believe will have global appeal,franchising or licensing is a good. Running a franchise takes some business acumen to make.
Ipr license is the ground breaking platform for publishers and agents to list and license. What is the difference between franchising and licensing. Certainly no licensor expected to end up defending franchise allegations. Many business owners choose to implement a licensing agreement arrangement to expand their business. Ipr license, find a publisher, global rights business, author profile. Licensing arrangements are governed by standard contract law so there are less administrative burdens than in a franchising arrangement. So, even from a business standpoint, the franchising vs.
Licensing vs franchising top 5 best differences with. Licensing refers to an arrangement between licensor and licensee where latter party would acquire the right to use products and goods where the ownership remains with the licensor whereas franchising refers to an arrangement between franchiser and franchisee where the latter will enjoy the ownership of a business on behalf of the franchiser in lieu. In such a situation, the licensor needs to either a. Licensing is where a business grants a thirdparty, known as the licensee, permission to use the business patents, trademarks, s, designs, or trade secrets, otherwise known as intellectual property. Oct 20, 2000 licensing a business concept seems like an easy way to grow a business, but as many entrepreneurs discover, maintaining a brands integrity through the process will determine the growth strategys. For more than three decades, adventure publishing group brought the licensing industry the licensing book. 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. Licensing definition and meaning collins english dictionary. 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 used by others. What are the pros and cons of licensing my product instead of manufacturing and selling it myself a. What is the difference between franchising and licensing in. Outside of the context of franchising, licensing is addressed only in about a tenth of the book. However, a nonfranchising licensing agreement usually does not include the rights for the grantee to use the granting companys brand or trademark.
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