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.
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 from exploiting the idea, design, name or logo commercially.
On-going Commitment In franchise agreement there is an ongoing commitment in effect you are:
In business for yourself but not by yourself! In license agreement or business opportunity there is no ongoing "royalty or required relationship" in effect you are:
In business for yourself and by yourself!
Time Required to Finish It takes months for franchises to be done. It takes about ten to fifteen business days to complete.
Distinct Areas of Law Franchising is based on securities law. It means compliance with the franchise laws, like the securities laws, requires registration of the franchise in the applicable jurisdictions
Licensing is a form of contract law. It means licensing is merely a contract between two independent contractors and franchise registration is not required.
Work Load Franchising route creates more work for lawyers in complying with all the registration requirements. Down the licensing road, it requires substantially less legal work.
Amount of Control The parent company keeps very tight controls on every aspect of your business but they also provide a lot of assistance in the management and marketing of your store.
According to Chick-Fil-A’s website the process to own a franchise is lengthy and rigorous. Chick-fil-A: Franchise Application Information. (n.d.) “At Chick-fil-A, we believe that our success in a community is tied directly to the caliber of the individual fra...
• The franchisees would have to raise approximately $750,000 of outside financing to fund the venture
The next section will illustrate the way in which separate commerce businesses function in the international legal atmosphere and to recognize any of the domestic and worldwide matters, which affect the assorted industry configuration and how those concerns can be successfully handled. Lastly, the paper will contain information about Sport Bar Franchise documents that are needed to initiate the business in the state of Maryland.
According to Wheelen & Hunger (2010), Panera management believed that its specialty bakery-café concept had significant growth potential, which it hoped to realize through a combination of owned, franchised, and joint venture-operated stores. Franchising is a key component of the company’s growth strategy. p. 29-10. The 'Secondary' of the 'Secondary'. Demand for Panera franchising opportunities was very high, which allowed Panera to be picky about where and with whom they would do business.
A synchronisation license is necessary for a song to be used for things such as television programmes, films, advertisements and radio, and it is so named because of the 'synchronisation' of a composition to the required film/image, advertisement or voice-over. Sometimes, a second license is required when using a specific recording of the track, called the 'master license,' which must be obtained from the record company. Songwriters and publishers receive royalties when the music is used for this purpose.
Kinsell, Krik. (June 2005). Factors to consider when planning consolidation. Franchising World, Vol. 37, Issue 6, pp. 63–65. Retrieved September 2, 2008, from: kirk.kinsell@ichotelsgroup.com
Licensing occurs when a firm pays a fee and enters into a licensing agreement giving it the rights to another company's product, resulting in the rights to make or sell that company's product.
Inma, C. (2005). Purposeful franchising: Re-thinking of the franchising rationale. Singapore Management Review, 27(1), 27-48. Retrieved from http://search.proquest.com/docview/226850145?accountid=39476
Not having to answer to a corporate boss is the dream of many and the flexibility that owning a business franchise creates provides this option. Success is not reached by simply creating a business, however. The level of success is measured by the size and efficiency of the business. Business growth is the driving force of the economy. The additional jobs and revenues created when a business expands allow the economy to grow at exponential rates. One of the fastest and most popular ways to increase the size of a business is to turn it into a franchise, which can then be purchased by individuals. Franchising provides opportunities that are beneficial to both the parent company and the purchaser. The company that owns the business can expand without having to pay such a large initial cost to open a new store since the franchise purchaser pays a cost to open the business. As well, the company can regulate many of the business activities so that there is a sense of consistency throughout all of the locations. The purchaser is allowed to use the trademarks and goods of the franchise which already have a large market presence. As well, they are provided with training and work standards by the company to help their business run smoothly (Kalnins & Lafontaine, 2004, p.761). Looking at the business model of the world’s largest food retailer, McDonald’s, provides great insight into franchising and business growth in general as well a better understanding of a global business that utilizes the franchising technique.
Copyright laws help protect intellectual property. Intellectual Property represent concepts, plans and discoveries that are produced in the mind (World Intellectual Property Organization. N.d.). This may come in the form of “music, film, books, computers, software symbols, names and
Intellectual property is property resulting from intellectual, creative processes. A product that was created because of someone’s individual thought process. Examples includes books, designs, music, art work, and computer files. (Miller R. J., 2011, p. 114) In the music industry a copyright is an important tool for artist to use to protect themselves from infringers. A copyright is the exclusive right of an author or originator of a literary or artistic production to publish, print, or sell that production for a statutory period of time. A copyright has the same monopolistic nature as a patent or trademark, but it differs in that it applies exclusively to works of art, literature, and other works of authorship (including computer programs). (Miller R. J., 2011, p. 125)
Before a partnership formation is imminent, the business needs to decide on which type of partnership to form. There are three types of partnerships: (1) general partnerships, (2) limited partnerships, and (3) joint ventures. All three partnerships contain two or more owners, but all partners assume equal division of ownership, liabilities, and profits in a general partnership. Limited partnerships offer limited liability protection based on each partner’s contribution percentage. Joint ventures are classified as general partnerships with limited existence periods. Once a type of partnership has been determined, the business fulfills a series of requirements before the partnership can be successfully formed. The first step is to register
The first step in any business is to think of or create a business idea. Without an idea, one cannot launch their business off the ground. A right direction is needed to create a business with a unique idea. However, other options include franchising or buying an existing business (1). Franchising allows an individual to run stores such as Burger King or McDonalds under the corporate name. It involves taking training classes and a heap of money in order to start a franchise. A Franchisee will have to buy products and services from the corporate entity they are franchising from, which is often required. Buying a franchise is like taking a piece of the pie from the company that is franchising and sharing that pie with everybody else. In addition having a franchise allows one to communicate and in essence become a big part of an added business opportunity (4). Franchising is far from easy to start and maintain for that matter. Starting a franchise involves a l...
Commercialization is the process of involving an activity in commerce. Commercialization is the process that is involved in making a product commercially successful. The process involves the production, dissemination, sales, marketing and support necessary to commercialize the product or activity. Commercialization apples to various sectors and these include the education, agriculture and the sport industries.
The owner has the ability to grow or contact its operation at will with no need to consult with a boss or board of directors