More competitive the markets are the more is the burden on these business organisations to ensure that they. Whats the difference between a franchising and licensing model. Get your kindle here, or download a free kindle reading app. 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. Large companies have both the models to offer to a person who wishes to be liked with them.
Nov 19, 2016 apr 24, 2020 licensing vs franchising self help learning notes edurev is made by best teachers of self help learning. The advantages and disadvantages of franchising by david e. Licensing the core client access license cal suite and. Franchising vs licensing differences between franchising. 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. Cal suites may also provide pricing thats more attractive than licensing the equivalent components individually.
Like a licence agreement, a franchise agreement is also a type of contract. What is the difference between franchising and licensing in. What is the difference between a franchise and a licence. Pdf xchange pro is a bundle product that includes pdf xchange editor, pdf tools and pdf xchange standard. Difference between franchising and licensing difference.
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. Difference between franchising and licensing free quote. In all, this is an excellent presentation of franchising invaluable to anyone currently in a franchise. Often we are asked what is the difference between a franchise and a licence.
This guide discusses some of the differences between a simple license and a franchise. In product trade name franchising, a franchisor owns the right to the name or trademark and sells that right to a franchisee. 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. Hidden camera investigation on what really happens to your car cbc marketplace duration. 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. Below is the top 5 difference between franchising vs licensing. In its simplest form, a licence is where a person called the licensor owns or has rights. Dec 23, 2008 there is a difference between licensing franchising and dealer networks. Whats the difference between licensing and franchising. Store, manage, and share files online with instant. As a business owner, one has to choose from the two models as to how he wishes to go ahead. Other languages use the terms formula or system in reference to format. The most distinctive feature of a franchise agreement is that a franchisor exercises significantly more control over franchisees than a licensor. Aug 26, 20 both the positive aspects and the lacunas associated with licensing are substantially discussed further in this paper.
Licensing vs franchising self help learning notes edurev. Used by businesses across the world, these two models carry. What is the difference between franchising and licensing. 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. What is the difference between licensing and franchising.
However, some people still think that franchising and licensing are almost the same and have no specific difference. Unlike a licence agreement, franchise agreements will contain specific directions on how the franchise. In such a situation, the licensor needs to either a. But there are many more types of franchise businesses. As you can see, the main difference between franchising and licensing. In return for use of the brand name, proven systems and support, the franchisee pays the franchisor a royalty fee. 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. Jul 10, 2017 franchising also has the oversight of the federal trade commission, in addition to state and local laws regarding franchising. An intellectual property licence is an agreement that gives a licensee. Elements of a franchise a franchise has been described as a license on steroids.
Compare and contrast licensing, franchising, contract manufacturing, and outsourcing. Difference between licensing and franchising praxis legal. A franchise model requires the implementation of a uniform franchise. Scribd is the worlds largest social reading and publishing site. Download now our 10 steps guide to find the right agent or distributor. This document is highly rated by self help learning students and has been viewed 190 times. 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. May 12, 2010 this guide discusses some of the differences between a simple license and a franchise. 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. Nov 19, 2016 what is the difference between franchising and licensing. This is because licensing is not subject to the ftc franchise rule.
Difference between licensing and franchising praxis. What is the difference between a licence and franchise agreement. Outside of the context of franchising, licensing is addressed only in about a tenth of the book. You should refer to that page for a definition and application of the terms. 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. Whats the difference between a licence and franchise. Certainly no licensor expected to end up defending franchise allegations. If you continue browsing the site, you agree to the use of cookies on this website. All publications are available to download free of charge at. A franchise is the agreement or license between two legally independent parties which gives. First, its important to understand the difference between. Pdfelement standard vs pdfelement pro pdf editor software.
Licensing and franchising class 11 business international. There are, however, important differences between a licence and franchise agreement that you should understand. After having clarified what these two concepts actually mean, one can also understand how licensing and franchising differ. Those fees generally include a flat amount to join the franchise. But this is not the case, as franchising is totally different to licensing. Despite the title, the book is more about franchising than licensing. Used by businesses across the world, these two models carry their own sets of advantages and shortfalls. Differences between licensing and franchising marketinginsider. Although there is some level of control with licensing, there is no control over marketing, training programs, etc. What is the difference between franchising, distribution, ag.
At the heart of franchising is the licensing of intellectual property in. Pdf tools licenses include pdf xchange editor, and the pdf xchange lite printer. The economic impact of franchised businesses in the united states pdf. This can be achieved by exporting a companys product into another country.
Most of the time when we hear the term franchising it refers to business format franchising. Unclear about the differences between licensing and franchising. What is the difference between a licence and franchise. Jan 28, 2017 how do i know if i am licensing or franchising.
We will now turn to the differences between licensing and franchising. If the answer is yes, then you have entered into a franchise agreement. Yet, these situations arise with considerable frequency. Franchising vs licensing is often the tough question potential wouldbe business owners ask themselves, as both are popular business models. 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.
Compare pdfs, how to compare pdf files adobe acrobat dc. Pdf tools does not include pdf xchange editor plus. Freeware is any software that is distributed for use at a price of zero. 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. In all, this is an excellent presentation of franchising invaluable to anyone currently in a franchise relationship or contemplating such a relationship. 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. At the franchise institute, we encourage people to consider the two options carefully before they. Difference between franchising and licensing compare the.
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. Both the positive aspects and the lacunas associated with licensing are substantially discussed further in this paper. Click select file at right to choose the newer file version you want to compare. 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. Licensing and franchising are sometimes used to mean the same thing, but there are differences. 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. Differences between licensing and franchising marketing. Licensing the license does not transfer ownership of the intellectual property, but merely gives the licensee the right to use it. Franchising and licensing are terms which describe very similar relationships but with stark differences. A that the worker is free from the control and direction of the hirer in connection with the. 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.
The benefits of franchising over licensing franchise law blog. Learn vocabulary, terms, and more with flashcards, games, and other study tools. The main differences are summarized in the following table. Franchising on the other hand is often confused with the term licensing. The major difference between franchising and licensing. 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. In contrast, a licensing arrangement allows a licensee considerable freedom in the operation of his or her business. Download this free guide provided by the internicola law firm, p. It is in a franchises know value duplicable and transferable. An introduction to franchising is designed to introduce young people to the fascinating world of franchising. Our web page licensing or franchising outlines the difference between licensing and franchising.
In order to understand the difference, it is necessary to understand exactly what a licence and a franchise are. Licensing even though from the looks of it, a licensing opportunity seems to be less advantageous as compared to a franchising business, licensing has its advantages as well. Learn more about comparing two pdf files start comparing your files with our free. On the other hand, franchising is a more complete arrangement. Includes licenses to use property that is implicitly or explicitly protected by industrial. Franchising is a type of licensing that goes beyond use of a specific product or branding and encompasses your business model. Licensing and franchising can be done both as a business owner and as someone looking to enter a specific market. 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. Franchising allows another business to replicate your entire company and business model in exchange for fees. 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. 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.
Difference between licensing and franchising with comparison. Franchising is based on a marketing concept which can be adopted by an organization as a. The owner of a business franchisor licenses to another. 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. Your system and written contract will determine whether you are a licensor or. This is most often seen in the soft drink or automotive industry.
Its easy to become confused between franchising and licensing because on the surface they sound remarkably similar. What is the difference between franchising, distribution, agency and licensing. Aug 12, 2017 the difference between licensing and franchising can be drawn clearly on the following grounds. International marketing is the export, franchising, licensing or full direct entry of a marketing organization into another country. 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. Many people think of fast food restaurants like mcdonalds, burger king, and wendys, when they think of franchising. Free software vs freeware difference and comparison diffen. Often, the difference between a licence and a franchise comes down to whether. 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. One advantage is that licensing costs much lesser in terms of the initial investment and ongoing charges. Structuring licenses to avoid the inadvertent franchise. Licensing, franchising, and other contractual strategies. In addition to franchising, there are two other popular methods by which businesses expand their market and distribution channels. Most of the time when we hear the term franchising.
This is a complex area of the law that requires a legal professional. Licensing arrangements are governed by standard contract law so there are less administrative burdens than in a franchising arrangement. The major difference between franchising and licensing the. 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. 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. Holmes northern california office s outhern california office 555 chorro street, suite d2 6621 pacific coast hwy. Martin mendelsohn, franchising law, kluwer, 2004 business format franchising is a type of commercial relationship based on a contractual agreement between. 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. The difference between licensing and franchising can be drawn clearly on the following grounds.
In franchising, the franchisor licenses its intellectual property to the franchisee. 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. The major difference between franchising and licensing we would like to take a minute to answer a very common question often asked. Pdf xchange editor and editor plus licenses include the pdf xchange lite printer. In licensing, another individual is buying the rights to use aspects of another companys branding, products, and trademarks in exchange for a percentage of. 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. A franchise has been described as a license on steroids. The franchisee is provided with a business in box, in exchange for a financial payment, not only. It is classified as a wasting asset due to the finite term of the license.