Franchising And Licencing – Know What Is The Difference Between The Two

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In case if you are investigating franchise versus license agreements, it’s likely because you’re investigating either incorporating your business into a franchise business or crediting your image to another organization for use. Knowing the contrasts between these two business agreements is vital before bouncing into a legally official agreement.

While some business proprietors may take a gander at licensing as a more straightforward option than franchising, this would be misinformed. These two sorts of agreements are legally different and are suitable in various situations. Businesses that would make great franchises would not settle on significant licensing agreements and the other way around. How about we investigate how licensing and franchising vary.


One of the significant contrasts concerning franchising versus licensing is the limit put on licensing agreements. A license is considerably more restricted than a franchise.

A license agreement takes into account the utilization of enrolled brand names; that is it. Franchise agreements, then again, consider the utilization of brand names, extra protected innovation, items, administrations, working manual and considerably more.


Another contrast between franchising versus licensing is the control that the dealer can apply over the purchaser.

In a franchise agreement, the franchisor can spread out explicit rules for how the franchisee markets the business, utilizes brand names, where the business is found and how the business is worked. The franchisor can apply a lot of command over the franchisee‘s business and how it works.

In correlation, a licensor has almost no influence over the business of a licensee. The licensor can make specifications on how the licensee utilizes ensured marks; however, they cannot handle some other licensee’s business.

Kind Of Business

Frequently, businesses that award or buy licenses manage items. Licenses are extraordinary for adding a notable brand or picture to an item, like attire or other consumer products.

Then again, franchises are largely help-based businesses. Most businesses that structure a franchise activity are chain eateries, inns, cleaning administrations, auto fix shops, programming fix organizations, and so forth.

Legal Guidelines

Overall, a franchise agreement is a considerably more severe and convoluted agreement. There are many moving parts inside a franchise agreement, where a licensing agreement is a clear credit of certain ensured checks or pictures.

In the two examples, general contract law is followed for the two licenses and franchises. Furthermore, there are explicit government guidelines for franchisees at the bureaucratic level, and some extra necessities are put somewhere around specific states.

There are significantly more legal obstacles and administrative necessities that should be followed when starting a franchise than with a license agreement.

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