If you are looking to grow – licensing products or franchising your business may be a consideration. In the context of channels to market, “franchising” and “licensing” could cause confusion, especially when both models involve one party granting the other party with specific rights in return for a fee.
The main differences between these two models are:
However, the licensee will operate under its own name with or without affiliate to the licensor (depending on the commercial arrangement). Contractually the licensee may have obligations to provide the licensor with reporting or be liable for breaching the licence terms, but generally the licensor will exert less control over the licensee’s business and operation.
If you are considering either of these options as a route to growth, make sure to seek advice as to the best option for your business and then be clear on the legal position.