Used by businesses across the world, these two models carry their own sets of advantages and shortfalls. We will now turn to the differences between licensing and franchising. Advanced edit word processing capabilities within your pdf file. Licensing is the practice of legally allowing the use of assets most commonly intellectual property rights owned by one business to another. 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. Franchising vs licensing differences between franchising. Take software and database technology, for example, which are invariably exploited through licensing. That is because a licensee does not hold the rights to the trademark and logo of the parent companys brand. Franchising vs licensing difference and comparison diffen. 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.
One advantage is that licensing costs much lesser in terms of the initial investment and ongoing charges. Jul 10, 2017 franchising might be right for your business, but it is not your only option. Dec 29, 2014 licensing the license does not transfer ownership of the intellectual property, but merely gives the licensee the right to use it. If you try to operate a franchise business as a distributorship or licensed relationship you are opening yourself up for all sorts of legal and financial liabilities. 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. However, some people still think that franchising and licensing are almost the same and have no specific difference. Licensing arrangements are governed by standard contract law so there are less administrative burdens than in a franchising arrangement. Traditionally, licensing is limited to a someone granting a license. The major difference between franchising and licensing. Create a license agreement to control viewing of pdf files. Licensing involves fewer requirements in that unlike franchising, there is no specific legislation setting out how you can and cannot deal with a licensee.
Aug 12, 2017 the difference between licensing and franchising can be drawn clearly on the following grounds. The licensor owns the asses and the licensee has the rights to use the assets. Do i need to credit adobe for the fonts i use in my projects. Differences between licensing and franchising marketinginsider.
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. This is a question that a lot of business owners and aspiring entrepreneurs ask themselves as they try to figure out which business model may be best for them. The portable document format pdf is a file format developed by adobe in the 1990s to. In such a situation, the licensor needs to either a. How does franchising differ from licensing in australia. Little caesars pizza little caesars pizza franchisees often comment that theyve enjoyed life experiences they never thought possible, thanks to their growth as a little caesars business owner. Check the boxes below and click the button at the bottom of the page to request free information from multiple franchises. Compare licensing vs franchising a business costs franchising a business overview franchising is a popular way to start a business because its much less risky than creating a business from scratch. The main differences are summarized in the following table.
This webinar discusses in detail the various alternatives to franchising, their relative strengths and weaknesses, and their legal requirements. You are attempting to convince a company to pay you a royalty on the wholesale of your product. Difference between franchising and licensing difference. Many business owners choose to implement a licensing agreement arrangement to expand their business.
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. Generally speaking, a longer term means you can enforce provisions like payment, noncompete, etc. At the franchise institute, we encourage people to consider the two options carefully before they. What is the difference and how do you know if franchising vs.
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. A license arrangement is primarily composed of 2 elements. Licensing, franchising, and other contractual strategies. Role of licensing developing countries vs uk wider regulatory framework standards, market surveillance, sanctions consultation challenge and complaints. In a nutshell, a franchise is a license wherein the licensor controls the licensee and benefits from that cont.
Fla offers several membership types to address specific needschoose the membership that is right for your business and enjoy all the benefits starting today. Unlike a licence agreement, franchise agreements will contain specific directions on how the franchise must operate. Contact an experienced franchise, distributorship and licensing lawyer serving orange county and all of california. Legal and policy implications the digital dilemma citation below captures the report of the committee on intellectual property rights and the emerging information infrastructure and computer science and telecommunications board commission on physical sciences, mathematics, and applications of. Simplification of business licensing single online application and payment process. Adobe already offers a passwordbased solution for encrypting pdf files. This guide discusses some of the differences between a simple license and a franchise. In licensing, another individual is buying the rights to use aspects of another companys branding, products, and trademarks in exchange for a percentage of. This legal difference forms the basis for what information needs to. While franchising is perhaps the worlds most powerful growth vehicle, the entrepreneur considering growth options would be. Licensing also works well where the licensor has developed some specific technology, knowhow, brand images or design which are attractive to licensees who wish to incorporate it into their existing businesses. This legal difference forms the basis for what information needs to be included in each type of agreement.
Password based security systems, surveillance and firewalls. Difference between franchising and licensing compare the. You are attempting to convince a company to pay you a. Licensing is an older, more established business model than franchising.
However, a nonfranchising licensing agreement usually does not include the rights for the grantee to use the granting companys brand or trademark. A key difference lies in the area of law by which each business type is governed. For a company looking to expand, franchising and licensing are often appealing business models. Acquisition involves a much larger upfront investment than licensing and the acquirers have to bear all uncertainties about the future development of the targeted biotech. Your work in this initial stage should be directed at answering and supporting the question why should my company license and invest in you and your product. You can secure a power pdf license for a single payment that wont expire ever. Indeed, to be a proper franchisee you are required to use their logo, name, product, and business system. Certainly no licensor expected to end up defending franchise allegations. 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. Its easy to become confused between franchising and licensing because on the surface they sound remarkably similar. Likewise, if the licensing company does not allow the use of its trademark, logo, advertising, etc. Scope licensing act 2003 gambling companion animals taxi and private hire.
What is the difference between franchising and licensing in. Also, the franchisee is expected to create its own niche and identity in the market. If you continue browsing the site, you agree to the use of cookies on this website. Cost when you license a business, there are no franchise fees, marketing fees or royalties. Likewise, a good pdf editor must be able to export pdfs into other editable formats such as microsoft word and powerpoint, html, or plain text, maintaining the original files hyperlinks, images. Ensure there is a sound distribution channel in place with concentration on surveillance and security. Franchising might be right for your business, but it is not your only option. The most distinctive feature of a franchise agreement is that a franchisor exercises significantly more control over franchisees than a licensor.
Another form of trademark license is a collateral product license. Franchising and licensing association singapore fla, started as singapores national franchise body. 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. Click here to request our free onehour webinar, alternatives to franchising. 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. Hidden camera investigation on what really happens to your car cbc marketplace duration. Build biotech tags, electronic signatures or holograms into products to distinguish them from fakes 6. Licensing doesnt have the same level of control, and the licensees determine their marketing system and the way they want to sell the products or services.
In assessing this you need to consider if someone else using your ip or product in a manner you would not approve would. Franchising vs licensing is often the tough question potential wouldbe business owners ask themselves, as both are popular business models. This is because licensing is not subject to the ftc franchise rule. In 2008, adobe published a public patent license to iso 320001 granting. Franchising is an arrangement in which the franchisor permits. Take software and database technology, for example, which are. Aug 07, 2015 franchising vs licensing business film booth. The difference between licensing and franchising can be drawn clearly on the following grounds. While a franchising business may require you to pay royalty every time a profit is made, a licensing opportunity does not demand such an expense.
However, licensing a business is generally far less expensive than buying a franchise. Elements of a franchise a franchise has been described as a license on steroids. It was one of the founding members of the world franchise council. In addition, many of these laws have provisions for criminal penalties, civil fines and the award of attorneys fees. While licensing relationships, without question, possess a legitimate purpose, they are extremely limited and cannot serve as an endrun around franchise regulation. As a business owner, one has to choose from the two models as to how he wishes to go ahead. Licensing how does franchising compare with licensing. Structuring licenses to avoid the inadvertent franchise. The major difference between franchising and licensing we would like to take a minute to answer a very common question often asked.
Yet, these situations arise with considerable frequency. What is the difference between licensing and franchising. Also, once the licensee is able to successfully set up its business and spin off on its own, the relationship between licensee and the parent company is restricted to the frequent purchase of products. Difference between licensing and franchising with comparison. Differences between licensing and franchising marketing. May 12, 2010 compliance with these laws can be cumbersome and can delay the rollout of your licensing program. 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.
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. Important on franchise vs licensing agreement example. 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. 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. Pdfcreator is free software, distributed under the terms of the agpl. The next step in licensing is proving your product. But if you are starting a small business that is dependent upon selling products of a big company, there are two ways you can do it. Maas pros, headquartered in markham, canada has been assisting businesses in implementing profitable and measurable digital marketing solutions in the areas of websit. Your brand, the patents, knows how, the trademarks etc.
On the other hand, licensing allows risk mitigation through tranche milestone payments and eliminates the need to integrate any liabilities attached to the acquired entity. 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. From a legal standpoint, franchising can be described as a super license where the franchisor grants the franchisee the license and right to use the franchisors trademarks and systems. Unless specifically prescribed in the licensing agreement, the licensee usually operates independently with little oversight and support from the licensing business. In general, a franchise is a business form where you pay a fee to the franchisors allowing you, the franchisee, to use their business logo, name, product, and business system. Franchise vs licensing will appear in the spirit of the conformity rather than its name. 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 pure trademark license, a licensor grants a single license to one licensee to enable the licensee to manufacture a product according to the licensors specifications, and to sell such product under the licensors trademark. But this is not the case, as franchising is totally different to licensing. This license allows a thirdparty licensee the right to use the licensees trademarks. It is really a great feeling to be changing over from an employee to an owner. Licensing, on the other hand, allows a licensee to pay for the rights to use a particular trademark. After having clarified what these two concepts actually mean, one can also understand how licensing and franchising differ. 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. Licensing the license does not transfer ownership of the intellectual property, but merely gives the licensee the right to use it. Unlike franchises, in which the franchisor exerts significant control over the franchisees operations, licensors are mainly interested in collecting royalties and supervising the use of the license rather than influencing the operations of. Stakeholder engagement licensing officers government policy leads business representatives lga. How is pdfmachine licensed when sharing the printer on a network.
A nationwide view on statelicensed mortgage entities. Whether you are licensing or you are franchising, the significant thing is to defend your ip. Pdf files may be optimized using adobe acrobat software or qpdf. However, failure to comply with these laws can subject youyour companys principals to liability for damages or rescission. A nationwide view on statelicensed mortgage entities 2011. Youll pay an upfront fee to purchase the license, but recurring costs will be. Updated july 18, 2011 conference of state bank supervisors 1129 20th street, nw, 9th floor washington, d. Licensing the relationship between a licensee and the parent company is not as tightknit as a licensee franchisor relationship. Ensure licensing and franchising provide oversight of ip 4. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Like a licence agreement, a franchise agreement is also a type of contract.
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