What is the concept of franchising?

What is the concept of franchising?

A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor’s name and system.

What is the key difference between licensing and franchising?

Key Characteristics of a Franchise and a Licence

Franchise	Licence
The franchisor dictates the exact methods and systems (such as uniforms, fit-out and location) the franchisee will adopt	Licensees are free to develop their own system for operating their business, such as by choosing the fit-out for their storefront

What is licensing and franchising in international business?

Licensing is another way to enter a foreign market with a limited degree of risk. Under international Licensing, a firm in one country permits a firm in another country to use its intellectual property( Patents, trade marks etc).

What is licensing and franchising Class 11?

Licensing and franchising : Permitting another party in a foreign country to produce and sell goods under your trademarks, patents or copy rights in lieu of some fee is another way of entering into international business. Foreign investments : Foreign investment is another important form of international business.

What is franchising and its advantages?

Assistance: When entrepreneurs buy a franchise; they get all the equipment, supplies and instruction or training needed to start the business. 3. Cost reduction: Franchisor can afford to buy in bulk and pass the savings to franchisees. Inventory and supplies will cost less than running an independent company.

What are the advantages of licensing and franchising?

Advantages of licensing/franchising :

• In this the Licensor or does not make any investment in other country.
• Licensor does not suffer any losses.
• Lower risks of government takeovers.
• Licensee has greater market knowledge being a local person.
• Other firms cannot copy the patents or trademark given to licensee/franchisee.

What are the advantages of licensing?

Some of the advantages of licensing include the following.

• Income without overhead.
• Potentially better marketing.
• Enter foreign markets more easily.
• Diffuse conflicts.
• Risk of IP theft.
• No guarantee of revenue.
• Unintended competition.
• Risk of diminished reputation.

What are the advantages of franchising and licensing?

The advantages of franchising over licensing include the following: Multi-Unit Expansion – Franchisors can enjoy the expansion of their business through the efforts of franchisees. Capitalized Expansion – Franchisees facilitate and capitalize unit expansion – not you.

What are the similarities between licensing and franchising?

Franchises and licenses are both business agreements in which certain brand aspects are shared in exchange for a fee. However, a franchising agreement pertains to a business’s entire brand and operations, while a licensing agreement only applies to registered trademarks.

What is an example of licensing?

Examples of licenses include a company using the design of a popular character, e.g. Mickey Mouse, on their products. Another example would be a clothing manufacturer like Life is Good licensing its designs and brand in a certain country to a local company.

What are the two main types of franchising?

There are two main types of franchising, known as Product Distribution Franchising (Traditional Franchising) and Business Format Franchising, which are conducted under a variety of franchise relationships.

What’s the difference between franchising and licensing business?

These two jargons are usually synonymously used while marketing or selling a product whose brand value is not typically owned by the seller; however, there is a very fine line of difference between these two modes of business. Today we attempt to understand the differences between Licensing vs Franchising.

Can a licensee slip into a franchising arrangement?

A licensing arrangement can “slip into” an unintentional franchising structure if the licensing contracts are drafted poorly or if the licensor inappropriately controls the business operations of the licensee.

What is the purpose of franchising in business?

Franchising is a business strategy for getting and keeping customers. It is a marketing system for creating an image in the minds of current and future customers about how the company’s products and services can help them.

Can a license be used for an unintentional franchise?

Some licensing agreements may end up actually creating unintentional franchises. A license simply provides an individual or company with the right to use licensed material or to do something that would otherwise be considered illegal. This is particularly common with intellectual property.