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Difference between licence and franchising... |
| Answer» \tBasis\xa0LicensingFranchisingBusiness ModelDeals with Products & GoodsDeals with providing ServicesOwnershipOwnership of the ultimate product is with the licensee, he only buys the right to use a certain patented / original product of licensor in exchange of royaltyOwnership of the business is with the franchisee, he purchases the right to run the same business on behalf of the franchisor in exchange of feesLegal regulationsStandard agreement governed by contracts law between the partiesStricter compliance requirements governed by Companies laws & other federal laws of international business (if dealing with a party outside the country)AdvantagesLicensor gets Vertical integration in the market without\xa0heavy capital investment\xa0& enhances its brand value Licensee gets access to market relying on a strong brand & eliminating competitionFranchisor gets access to the geographically diversified marketplace without compromising on brand value. Franchisee gets continual support from the franchisor to extend an already successful business.DisadvantagesLicensor does not have control over the ultimate use of its intellectual property rights.The heavy initial investment by the franchisee to meet the quality standards of the franchisor. The degree of autonomy is very less for the franchisee in the operational matters of the business\t | |