Franchising V/S Licensing

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Franchising is an extension or replica of existing running business. The model may vary but the concept of expansion remains same. When you buy a franchise, you pay a fee upfront to get the brand name of a company, get the systematized operations. Huge number of products and services are offered by franchisor that are very lucrative for a franchisee and also help in successful running of the business. In franchising, brand has a control over the franchisee, his territorial rights and his modus operandi. Moreover, royalty payment per month is also attached with the concept.

Franchising V/S Licencing

Licensing is selling the rights to another party to use your company’s products and trademarks in exchange of some appealing royalties usually an agreed on percentage of licensee’s sale. The licensor retains ownership of the goods or intellectual property involved. This helps the licensor to expand in new territories without investing money. A licensee enjoys more freedom that a franchisee as power down flow is more in licensing. Same as franchising, there is a lower risk in licensing too as the market and customer base is served and one doesn’t have to work from the scratch.

Your choice in the franchising vs. licensing debate rests purely on your desires and needs as a business owner and money at your disposal.

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