Write the difference between licensing and franchising.
The major differences between licensing and franchising are as follows −
Business model deals with products and goods.
Ownership is with licensee.
Governed by contracts law between parties
Without investing huge capital licensor will get vertical integration in market.
Licensor don’t have control over intellectual property rights.
Registration is not mandatory.
No training and support is provided.
One-time property/rights transfer.
Negotiable fee structure.
Royalties are commonly used term.
Covers single product/products.
Generally, established business will go licensing.
Business models deals with providing services.
Ownership is with franchisee.
Governed by companies’ laws and other federal laws (international business)
Franchisor get access to diversified market geographically.
High initial investment is required.
Registration is mandatory.
Training and support is provided.
Ongoing assistance is needed.
Management fee is commonly used term.
Covers total business
Generally, start-ups will go for franchise.
Published on 27-Jul-2020 11:47:26