What Is The Difference Between Franchise And Licensing Agreement

Even though a franchise system gives you more control, it also comes with greater ongoing obligations as a franchisor. If you choose a license for your business, keep your license agreement simple. Avoid including clauses regarding the branding and appearance of the licensee`s business, otherwise you may be up to a franchisor`s standard. If you have any questions or need help creating a franchise or license agreement, contact LegalVision`s franchise lawyers at 1300-544-755 or fill out the form on this page. If you`re dealing with franchise and licensing agreements, it`s probably because you want to turn your business into a franchise or lend your brand to another company to use. Knowing the differences between these two trade agreements is essential before embarking on a legally binding agreement. The downside of franchising is mainly the loss of control you have as a business owner, as the franchisor makes a lot of decisions for you. Of course, some entrepreneurs see this shrinking control as a relief and therefore as an advantage. Also, profits tend to be slightly lower than what you had if you had your own business, because as a franchisee, you usually have to pay a franchise fee to the franchisor. (a) Trademark License – The license of a trademark, i.e.

You grant your franchise the license and right to use your company`s name or trademark to duplicate your business and establish a new location or service area; Licensing and franchise expansion models have advantages, and the strategy you choose depends on how your business operates and how much control you want to have over your expansion and business partners. While some business owners view licensing as a simpler alternative to franchising, it would be misguided. These two types of agreements are legally very different and adapted to different scenarios. Companies that would make good franchises would not necessarily make good licensing agreements, and vice versa. Let`s take a closer look at how licenses and franchises differ. Licensing, on the other hand, is a limited and legal business relationship in which a particular party is granted the right to use certain trademarks of a trademark. The commercial relationship exists between the Licensor (the one who owns the Trademarks) and the Licensee (the one who is granted the rights of use). If you`re reading this, there`s a chance you`re an entrepreneur who wants to make more money, has multiple sources of income, retires early, or leaves an inheritance to your family. Franchising and licensing can help. If you`re looking for ways to grow your successful business, you may fall between using a franchise or a licensing model. Each model has its advantages and can provide an effective expansion strategy. .