Difference Between Franchise and License

If you are interested in starting your own business and are evaluating options, you have surely heard about the franchises and licenses.

Although both are options that allow you to use a brand or a business model, there are important differences between them that worth it know before making a decision.

What is a franchise?

Una excess It is a business model in which a company (franchisor) grants the right to another company (franchisee) to use its brand, products, services, know-how and other elements, in exchange for financial compensation and compliance with certain obligations. .

• The franchisor provides a ongoing support to the franchisee during all the time of the franchise.
• The franchisor transfers a proven business model to the franchisee, which reduces the risk of failure.
• The franchisor receives a royalty or other form of financial compensation for the use of your brand and business model.
• The franchisee is obligated to follow standards, procedures and policies established by the franchisor.
• The franchisee has a higher probability of success, since it benefits from the image and reputation of the franchisor's brand.

What is a license?

Una license is an agreement in which one company (licensor) grants the right to another company (licensee) to use its intellectual property, such as a trademark, patent or software, in exchange for financial compensation and compliance with certain obligations.

• The licensor does not necessarily provide ongoing support to the licensee, unless agreed in the license agreement.
• The licensee does not necessarily receive a proven business model of the licensor.
• The licensor receives a compensation for the use of its intellectual property.
• The licensee may be required to follow standards, procedures and policies established by the licensor, as agreed in the license agreement.
• The licensee may or may not be successful in the market, depending on the quality of the licensed intellectual property and your ability to use it effectively.

Conclusion

In summary, the main difference between a franchise and a license is that a franchise includes the use of a brand and a proven business model, as well as ongoing assistance from the franchisor, while a license only includes the use of an intellectual property and does not necessarily continuous assistance from the licensor.

Ultimately, choosing between a franchise and a license will depend on your goals, resources, and the availability of options in your market.