Chapter 16 licensing, franchising, and other contractual. Creating a franchise agreement requires a good understanding of what sets the business apart from the competition and what makes it successful enough to warrant franchising to other locations. Lower cost duration of licensing agreement is flexible, need not be at least 5 years licensing is cheaper when in bad economic situation comparison franchising. Franchising is a type of licensing that goes beyond use of a specific product or branding and encompasses your business model. The franchisor, being a business with a strong brand and a wellestablished and profitable business model, looks to replicate that model by franchising it to other people the franchisees. Certainly no licensor expected to end up defending franchise allegations. This is because licensing is not subject to the ftc franchise rule. What is the difference between licensing and franchising. Most of the time when we hear the term franchising it refers to business format franchising. Each growth strategy has its own advantages and disadvantages, and each has its own legal ramifications. Licensing is a contractual arrangement in which one firm grants access to its patents, trade secrets or technology to another firm in a foreign country. Holmes northern california office s outhern california office 555 chorro street, suite d2 6621 pacific coast hwy.
Franchising is a form of licensing whereby the franchiser provides a standard package of components or ingredients together with management and marketing expertise, and the franchisee provides capital, market knowledge, and personal involvement. Franchising application is available which can be submitted electronically. Everything you need to know about buying a franchise how to franchise your own business the pros and cons of franchising versus licensing insider tips for selling a franchise get real results right now when you discover all that instant success has to. International franchising 3rd edition is an indepth examination of the most important and practical questions relating to international franchising. So if you are a business owner evaluating licensing versus franchising, consider. An introduction to franchising is designed to introduce young people to the fascinating world of franchising. No investor paid cash to the licensor up front structuring licenses to avoid the inadvertent franchise by rochelle spandorf. The advantages and disadvantages of franchising by david e. Exporting intermediaries, licensing and franchising. A multimillionaire who built action international up from a homebased operation to. Franchising is a business strategy in which franchiser owner of the business, product or services, affiliate with franchisees dealers of products for distribution, business expansion, and marketing. View notes podcast 1 exporting, licensing, franchising. A multimillionaire who built action international up from a homebased operation to the 16th fastest growing franchise in the world in just twelve years, with nearly 1,000 franchises worldwide, brad sugars is one of the most successful franchising experts in the world.
Owning a franchise allows you to distribute the companys products as well as to use. Franchising faqs how do i start the process of applying for a mcdonalds franchise. In none of these cases did the parties intend to form a franchise relationship. Franchising allows another business to replicate your entire company and business model in exchange for fees.
Licensing and franchising free download as powerpoint presentation. Licensing arrangements are governed by standard contract law so there are less administrative burdens than in a franchising arrangement. Franchisees use the trademark and strategies of parent company i. This article will explore different growth strategies with a particular emphasis on franchising, which is the most highly regulated of the growth strategies analyzed. Download pdf successful franchising free online new. Designed for use by the franchise attorney or professional, it is the preeminent work for the franchisor who either is contemplating, or already has, an international presence. Start studying exporting intermediaries, licensing and franchising.
Our findings also indicate that franchisors choose the store in store franchising strategy due to the operational. In addition to the obvious economic benefits of employment, output, and tax, franchising development injects expertise and training in various industries and increases the entrepreneurial and managerial capabilities and skills of the labor force. If you are building or have built a brand in yourhome country that you believe will have global appeal,franchising or licensing is a good. The business format franchise is the gold standard for franchising. A franchise is a license to use the name, trademarks, and proprietary products of an existing company. Owning your own franchise can be a great way to start a small business without taking on the risks that are associated with starting from scratch. Licensing, franchising, and other contractual strategies. Download the international franchising committee newsletter, september 2015. Franchising and factoring definition, examples, diagrams. Pdf download, members will need to login using their iba username and password key issues under french law in franchise international franchising committee newsletter article, may 2015.
The conversion provision in the license agreement is probably unenforceable. The conversion language in the license agreement is a red flag and sign that your license is probably a franchise. Those fees generally include a flat amount to join the franchise, along with ongoing royalties. Franchising is an arrangement in which the franchisor permits. A licensing agreement can contain terms which are restricted in a franchise agreement by the franchise act 1998. Because america is the worlds most mature and sophisticated franchise market, use of the franchise model internationally is a competitive advantage for u. Franchising, licensing, contract manufacturing pros and cons. Click download or read online button to get the economics of franchising book now.
A franchise is the agreement or license between two legally independent parties which gives a person or group of people franchisee the right to market a product or service using the trademark or trade name of another business franchisor. Structuring licenses to avoid the inadvertent franchise. The obvious advantages of licensing over franchising include reduced legal costs, reduced accounting and auditing costs, no registration and approval of the license program with any state, and quicker entry into the marketplace. The broad scope of the franchise laws may apply to a distributorship or license relationship resulting in an unwitting breach by a business owner of federal or state franchise and business opportunity laws. At ifsb, we assist business owners to identify the suitable expansion method which is required for the success of the organisation in the development of the businesses prototypes and management system. Download successful franchising ebook pdf or read online books in pdf, epub, and mobi. Many people think of fast food restaurants like mcdonalds, burger king, and wendys, when they think of franchising. A franchise is a license, though you usually dont find someone so focused on language minutia that they make a big deal out of the distinction in the sense of business opportunities.
If you continue browsing the site, you agree to the use of cookies on this website. Many businesspeople and professionals think that franchising and licensing are the same, but the fact is that they are different. In addition to franchising, there are two other popular methods by which businesses expand their market and distribution channels. The conventional wisdom that prevails in thewest is that franchising provides a net benefit to the host market. Analyze the economy, understand the society, and manage effectively management for professionals. Licensing when considering which model will work best for your business you need to consider the nature of your business and what degree of control you need over your ip or brand when it is. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Download let a franchising guru show you how its done.
Avaliable format in pdf, epub, mobi, kindle, ebook and audiobook. A history of american drivein restaurants 19201960 free download cheap eats in paris free download china business 2. Two powerful ways to grow your business in any economy 4th ed. The broad scope of the franchise laws may apply to a. Licensing is an arrangement in which a company licensor sells the right to use intellectual property, or produce a companys product to the licensee, for a negotiated fee i. Licensing, on the other hand, allows a licensee to pay for the rights to use a particular trademark. Given the prevalence of franchising and the interstate, national, and even international scope of so many franchise networks today, attorneys need to know about potentially applicable federal, state, and foreign franchise laws.
The difference between licensing and franchising can be drawn clearly on the following grounds. But there are many more types of franchise businesses. Global franchising and development in emerging and. This type of franchise includes not only a product. As an experienced corporate and transaction lawyer, author andrew sherman offers insider insights into unique opportunities for business growthspecifically, leveraging your intellectual capital through franchising and licensing. Sherman published on 2011 by amacom div american mgmt assn. The economics of franchising download ebook pdf, epub. All franchising services are handled by intellect franchising sdn bhd ifsb, which is a member of the intellect group of ip companies. It delivers a uniform, standardised and consistent product, and this is indeed one of its key strengths.