Difference Between Franchising and Licensing

Franchising vs Licensing

Every one knows about franchising and licensing. However, some people still think that franchising and licensing are almost the same and have no specific difference. But this is not the case, as franchising is totally different to licensing.

In franchising, the franchisee gets the right to display the same brand logo, trademark, name and image as that of the parent company. In licensing, the licensee does not have any right to the brand logo, trademark, name and image.

In Franchising, there is always a close link or bond between the franchisee and the franchiser. There is a good working relationship between the franchisee and the franchiser. It can also be said that the franchise is only an extended part of the parent company. In franchising, the franchiser provides training and also support to the franchisee. In Franchising, the franchiser may have a level of control over the services and products. Moreover, the franchisee gets the territorial rights on the products.

Unlike franchising, there is no close link or bond in licensing. This is because the licensee is not using the company’s brand name, logo or any other thing. They work as a separate entity and do not behave as part of the parent company. The licensee will not have any territorial authority and as such the parent company would also enter the business in their regions. When compared to Franchisee, the licensee does n t get training or support from the parent company.

When talking about the fee, licensing cost is less, when compared to franchise cost. Moreover, the franchisee has to pay some royalty to the franchiser each time business is done.

Where licensing is just a simple agreement or contract between the licensee and the licenser, franchising involves securities law and other legal formalities.

In case of freedom, a licensee has more freedom with regard to the business. The licensee has all freedom with regard to the marketing and sale of a product. In contrast, the franchiser has control over the marketing, sales and services.

Summary

1. In franchising, the franchisee gets the right to display the same brand logo, trademark, name and image as that of the parent company. In licensing, the licensee does not have any right to the brand logo, trademark, name and image.
2. In Franchising, there is always a close link or bond between the franchisee and the franchiser. But this bond is absent in licensing.
3. When compared to the franchisee, the licensee doesn’t get training or support from the parent company.

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