What are the key differences between franchising and licensing?

What are the key differences between franchising and licensing?

Franchising involves a business model where a franchisee operates under the brand of a franchisor, while licensing allows a licensee to use a brand's intellectual property without the same level of control.

Can you give examples of industries where each model is commonly used?

Sure! Franchising is common in fast food (like McDonald's) and retail (like 7-Eleven), while licensing is often seen in entertainment (like Disney characters) and technology (like software licenses).

What are the advantages of franchising over licensing?

Franchising offers brand support, training, and a proven business model, which can lead to higher success rates compared to licensing, where the licensee operates more independently.

Are there any disadvantages to franchising?

Yes, franchising can involve high initial fees, ongoing royalties, and less operational freedom for the franchisee compared to licensing.

How do I decide which model is better for my business?

Consider your business goals, the level of control you want, and the resources you have. Franchising may be better for brand expansion, while licensing could suit those wanting to leverage IP with less involvement.