Franchising vs Licensing

Franchising and licensing can be confusing: are they similar? Are they different? What does each one involve?

If you are looking into franchising or licensing, here is a comparison:

Franchising

Franchising involves intellectual property (trademarks, logos, slogans, etc…) and an operating system, which translates into a business model. Although the franchisees use the intellectual property, it is still owned by the franchisor, and franchisees get training and support, as to learn the operating system of the franchise.  Also, the franchisee gets territory rights, as franchisors do not want to cannibalize business by opening too many locations in one area. Some states do require franchises to be registered. In terms of payment, there is usually an upfront franchise fee and then on-going royalties.

Licensing

Unlike franchising, licensing only involves intellectual property. Because licensees are not getting an operating system there are no territory rights (so licensees often must compete against each other), training or support or registration required for licensees. Payment for licenses is often either a flat fee or royalties, similar to the ones in franchising.

Overall, there are more differences than similarities when it comes to franchising and licensing. Deciding which one is right for you is dependent on what kind of business you want to open and how you would like to run your business. If you are looking for more structure and a set plan for running your business, a franchise might be right for you.

If you are looking for a franchise, check out Executive Care at http://franchise.executivehomecare.com/