Difference Wiki

Franchising vs. Licensing

The main difference between franchising and licensing is that franchising is generally related to the service business, whereas licensing is normally associated with the production and marketing of goods.

Key Differences

Franchising is offered with territorial rights; on the contrary, licensing is not offered with territorial rights, and a licensee can sell similar products and licenses in the same area.
Janet White
Sep 18, 2019
Registration is required in franchising due to security law; on the other hand, registration is not required in licensing.
Franchising is generally related to the service business, whereas licensing is normally associated with the production and marketing of goods.
Franchising is administrated by law sanctuaries while licensing is directed by agreement law.
The fee structure of franchising is standard; on the contrary, fees of licensing is negotiable.
Aimie Carlson
Sep 18, 2019
Trademark or logo is used by the franchisee and retained by the franchiser, whereas licensing can be licensed.
Aimie Carlson
Sep 18, 2019
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Franchising needs ongoing assistance of franchiser; conversely, licensing involves the one-time transfer of rights or property.
Samantha Walker
Sep 18, 2019
Support and training are provided by franchiser while licensing does not provide any support or training.
Samantha Walker
Sep 18, 2019
Franchising tends to be a startup situation as regards the franchise, while in licensing, licenses are normally taken by well-established businesses.
Aimie Carlson
Sep 18, 2019
Franchiser implement its control over franchise; on the flip side, the licensor does not have any control over licensee.
Janet White
Sep 18, 2019
The duration in franchising is the agreement of franchise normally for 5-11 years, while the duration of agreement terms are 16-20 years common in licensing.
Harlon Moss
Sep 18, 2019

Comparison Chart

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Franchising is founded on a marketing concept, adopted by an association as an approach for business expansion.
Licensing is an official permit or permission to own, and use something and as well as the document of that permission.
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Governed By

Securities law
Contract law

Registration

Required
Not required

Territorial Rights

Offered to franchisee
Not offered
Samantha Walker
Sep 18, 2019

Support and Training

Provided
Not provided

Use of Trademark/Logo

Used by a franchisee, retained by the franchiser
Can be licensed
Janet White
Sep 18, 2019

Control

Exercise control over a franchisee
Does not have control over the licensee
Samantha Walker
Sep 18, 2019
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Duration

5-11 years
16-20 years
Samantha Walker
Sep 18, 2019

Fee Structure

Standard
Negotiable
Harlon Moss
Sep 18, 2019

Examples

Subway, McDonald's, 7-11, Dunkin Donuts, etc
Microsoft office, mickey mouse, life is good, etc
Janet White
Sep 18, 2019

Franchising and Licensing Definitions

Franchising

A privilege or right granted by law, especially the right to vote in the election of public officials.

Licensing

Official or legal permission to engage in a regulated activity
"He believed that the subcommittee gave him license to interrogate anyone about any possible links to communism" (Donald A. Ritchie).

Franchising

A special privilege given by government to a corporation or an individual to engage in a particular activity using public facilities, especially to provide a public service such as transportation or communications.

Licensing

A document, card, plate, or tag that is issued as proof of official or legal permission
A driver's license.

Franchising

The establishment of a corporation, including the granting of certain privileges such as exemption from individual liability for the acts of the corporation.

Licensing

A contract allowing someone to use a proprietary product or service
Has a site license for that software.

Franchising

Authorization granted to someone to sell or distribute a company's goods or services in a certain area.

Licensing

Freedom of action or permission to act
"Doctors labeled many of the organs of the immune system 'functionless' ... giving surgeons license to remove them with abandon" (Andrew Weil).

Franchising

A business or group of businesses established or operated under such authorization.

Licensing

Poetic license.

Franchising

A brand name under which a series of products is released.

Licensing

Lack of due restraint; excessive freedom
"It is important to preserve freedom only for people who are willing to practice self-denial, for otherwise freedom degenerates into license and irresponsibility" (Milton Friedman).

Franchising

The territory or limits within which immunity, a privilege, or a right may be exercised.

Licensing

Heedlessness for the precepts of proper behavior, especially with regard to sex
"noir stories of the consequences of sexual license" (Foster Hirsch).

Franchising

A professional sports team.

Licensing

An excuse or justification to do something wrong
People who see low-fat labels as a license to eat larger amounts.

Franchising

To grant a franchise to.

Licensing

To give or yield permission to or for
"Deep down I wondered what licensed me to speak" (Jan Clausen).

Franchising

Present participle of franchise

Licensing

To grant a license to or for; authorize.

Franchising

The establishment, granting, or use of a franchise.

Licensing

Present participle of license

Licensing

A giving of license to do something; sanction.

Franchising vs. Licensing

Franchising is generally related to the service business, whereas licensing is normally associated with the production and marketing of goods. Franchising is administrated by law sanctuaries while licensing is directed by agreement law. Registration is required in franchising due to security law; on the other hand, registration is not required in licensing. Franchising is offered with territorial rights; on the contrary, licensing is not offered with territorial rights and a licensee can sell similar products and licenses in the same area. Support and training are provided by franchiser while licensing does not provide any support or training. Trademark or logo is used by the franchisee and retained by the franchiser, whereas licensing can be licensed. Franchiser implement its control over franchise; on the flip side, the licensor does not have any control over licensee. Franchising needs ongoing assistance of franchiser; conversely, licensing involves a one-time transfer of rights or property. The fee structure of franchising is standard; on the contrary, fees of licensing is negotiable. Franchising tends to be a startup situation as regards the franchise, while in licensing, licenses are normally taken by well-established businesses. The duration of agreement of franchise in franchising is normally for 5-11 years, while the duration of agreement terms are 16-20 years common in licensing.

What is Franchising?

Franchising means an arrangement between franchisor and franchisee in which franchisor permits franchisee to use the brand name or business model for a fee, to conduct business as an independent branch of the franchisor (parent company). Franchising occupies the whole occupational plan which comprises all intellectual rights, goodwill, trademarks, know-how, and business contacts. Franchising is all encircling. Franchising tends to be a startup situation as regards the franchisee. The duration of agreement of franchise in franchising is normally for 5-11 years. Franchisee in franchising is very definitely selected by the franchisor, and its replacement is also controlled by the franchisor. The franchisor is bound as it’s the part of an agreement to convey its franchisees the whole occupational format, including profits and losses of the ongoing research programs. The franchisee always participates additional for the business set-up than the belongings he received, although franchisor does retain the main goodwill.

Possessing a franchise permits an individual to participate more in an established system with support and training from the franchise and to become self-employed. There is on-going research and develop, reduced risk of failure, and a semi-monopoly in a specific territory. Franchising permits franchisors to develop their business for usually less deal rather than founding their new locations themselves. A businessman should look at financial statements, it’s inflows and cash flows and compares it to competitive franchises in those similar areas. They should investigate intellectual property issues like patent ownership and name brand availability search.

What is Licensing?

Licensing means an agreement in which a company (licensor) sells the right of a company to use intellectual property or produce a product to the licensee of the company for royalty. In other words, licensing is normally associated with the production and marketing of goods. Licensing is directed by agreement law. Registration is generally not obligatory in licensing. Licensing is not offered with territorial rights, and a licensee can sell similar products and licenses in the same area. Licensing does not provide any support or training. Licensor has no control over the licensee’s business but can control the use of the intellectual property by the licensee. Licensing involves only a one-time transfer of rights or property. The fee structure of licensing is negotiable. A licensing agreement takes only one to complete the process.

The advantages of licensing are that a license permits the licensee to make and sell an idea, use, design, name or logo for a fee. For licensors, they are very beneficial because they let them enlarge their business limit without investing in new places.

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