Differences between Franchising Agreements & Licensing

Al owners of small business face the dilemma either to invest more capital and continue to grow or to remain a small company without additional investments. Due to the fact of the presence of inherent risks and the need to make investments, most of the owners make the decision to remain small. However, there are two options for the business owners to consider, if they want their business to grow quickly, without investing their own costs: licensing and franchising. A license is needed in order to give an individual a permission to do something, to drive, to use intellectual property, etc. Thus a license is a kind of contract, according to which one party grants permission to the other party. The organization, which receives this license, is to compensate the licensor via paying a flat fee, royalties or the combination of both. “The agreement does not transfer ownership of the intellectual property. By licensing to third parties, small business owners can expand their businesses’ reach and grow sales without having to invest in new locations or distribution networks, and risking failure.” (Guzman, 2018, p. 2). Franchising is a similar option to grow one’s business, but the franchisor provides the permission not simply to use the intellectual property, but also the operating system for it. Franchisors provide their trade marks, their marketing systems and distribution systems in order to let the products or services to be distributed. The franchisee is to pay an upfront fee back and often also a monthly or annual fee. “Like licensing, franchising can help a small business grow rapidly and, although it requires more set-up and investment than a pure licensing deal, franchising remains considerably more affordable than opening new locations.” (Guzman, 2018, p. 2). Under the condition of knowing and understanding of the major similarities and differences between licensing and franchising, each business owner is able to make his own choice, which would be the best for his company.

References:

Guzman, Oscar. (2018).  Differences Between Licensing & Franchising Agreements

The terms offer and acceptance. (2016, May 17). Retrieved from

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016.

[Accessed: March 28, 2024]

freeessays.club (2016) The terms offer and acceptance [Online].
Available at:

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]
close
Haven't found the right essay?
Get an expert to write you the one you need!
print

Professional writers and researchers

quotes

Sources and citation are provided

clock

3 hour delivery

person