What Is The Difference Between A Franchise And License Agreement

April 15, 2021

In the most basic terms, the biggest difference is the amount of help you get. With a franchise, you`ll probably get support in the areas of training, marketing, site selection and other areas, while a licensing agreement offers little or no support. Learn more about these two business models so you can pick up the right choice. If you decide to open a business with an already established brand, you may have heard that people are talking about franchises and licenses. There is a difference between these two economic models, but what exactly is this difference? Disney`s main competitor, Warner Bros., also derives significant revenue from the IP business it owns, with DC Comics offering massive licenses for toys and clothing. Even the magical world of Harry Potter is the result of a licensing agreement. As Warner Bros. does not own theme parks, it has decided to grant its amusement parking rights to Universal Studios to take advantage of the Harry Potter IP. In franchising-comma; run your business as you are responsible for managing it because the franchisor does not only retain control of the intellectual property (the brand) comma; it also retains control over how franchise activities are operated. You put the capital to start business-Comma; but the franchisor provides you with the know-how to manage the operation according to its business model. A licensing agreement is a written contract in which you give another person or company (the licensee) the right to use something. An intellectual property license is an agreement that gives a licensee rights for the use of: At the other end of the spectrum is the license model; where you pay for the use of intellectual property `comma; but you are free to run your business as you wish.

The brand that licenses you may specify for which its intellectual property should be used, but it does not provide you with any support such as Site Selection-comma; training-comma; Marketing or any of the other support systems you like if you are part of a franchise system. Licensing agreements are often seen as a cheaper alternative to a franchise agreement, as there are fewer upfront costs and less operating costs during the business relationship for the licensee. Licensees generally determine their own marketing strategies and systems for the operation of their business. A franchise is an extension of an existing brand or a company that wants to grow. It is an asset of your brand that is subject to the federal law on securities of value. (b) a license by which a technology company, as a licensee, licenses a single person or a company as licensed for the use of a particular technology. For example, one example: an example would be that Microsoft grants individual users a license to use the Windows operating system. To understand the difference, it is necessary to understand exactly what a license and a franchise is. Compared to franchises, another positive aspect of a license is the simplicity of the agreement. Since the licensing agreement only covers the use of one (or a few) protected trademarks, the agreement will be fairly simple and simple. You must act in good faith when interacting with the franchisee and disclose certain information about a disclosure document (which franchisors must update each year).

The “licensee” may not have entered into the contract with you if you had disclosed the information required by law.