Shireen Smith (from YouTube) - Part 2 Licensing And Franchising, What Is The Difference And Does It Matter?

When it comes to licensing a business format, whereby you grant a third party the right to replicate your business, the important point is that franchising traditionally involves a number of formalities and costs that you can avoid when you choose the licensing routeOne way to scale their business is to issue a licence to a third party to deliver a related product under their brand nameGrant a licence to someone to sell your product under their own brand nameLuxury brands are highly sought after for licensing, as their brand brings a cachet to the product to which they lend their name Pierre Cardin is a classic example of this, by engaging in indiscriminate licensing, it devalued its brand and lost much of its cachetOne of the key issues is how ownership, control and use of the brand can be spread between different businessesWhy the Distinction Between Franchising and Licensing MattersIt’s not possible to escape the regulators’ attention by passing off a franchise as a licence because the law looks at the essence of an arrangement rather than its nameBusiness owners in the UK can, therefore, be misled into believing that franchising is their only optionFranchising gives you the potential for national and international expansion, rapid growth with lower capital outlay.My suggestion, if it would work for your business model, is to give yourself time to evaluate whether franchising is the right option by testing the waters with licensing firstLicensing is a type of legal agreement for exploiting IP that is highly flexibleAccess the 7 Costly Mistakes to Avoid When Branding or Rebranding eBook when you subscribe to TUNED NEWS.Brand Tuned's Newsletter