Franchising Vs. Licensing
Franchising and licensing are means of expanding a business. These two terms are often confused with one another. However, franchising and licensing come from two distinct areas. A comprehensive difference is shown in the following table.
Franchising Licensing
Definitions Franchising is a business model in which you purchase a license of a specific business.
The Franchise Fee {Licensing fee} gives you the right to open a franchise of that particular business, using trademarks, signage, products, software, business systems etc.
Franchising is a term which can be applied to just about any area of economic endeavor. Franchising encompasses products and services from the manufacture, supply for manufacture, processing, distribution and sale of goods, to the rendering of services, the marketing of those services, their distribution and sale.
Licensing is granting of permission to use intellectual property rights, such as trademarks, patents, or technology, under defined conditions. It prevents others from exploiting the idea, design, name or logo commercially.
It is a business arrangement in which a local firm in the host country produces goods in accordance with another firm's (the licensing firm's) specifications; as the goods are sold, the local firm can retain part of the earnings.
Agreement A franchise agreement is a specialized license and will cover all aspects of IP, user obligations and use provisions A license agreement is a business arrangement where a licensor via a monopoly right such as a Patent, a Trade Mark, a design or a copyright has to exclusive right which prevents others fro ...