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Published on September 17th, 2021 | by Newt Rayburn


Difference Between Licensing Agreement

Remember that even if you and your business partners consider your agreement to be a licensing agreement, if you meet the key criteria, the ACCC will classify you as a franchisee and you will have to abide by the franchise code of conduct. If you`re looking for ways to expand your successful business, you can stick between using a franchise or licensing model. Each model has its advantages and can offer an effective expansion strategy. However, there are important differences between a license agreement and a franchise agreement that you should understand. For example, what do you think of the “substantial” control of the system or the marketing plan for the company? And considering that licensing agreements also require payments (usually in the form of a pre-commission), what types of payments indicate a franchise agreement as opposed to a license agreement? These are not easy questions to answer. To grow your business, you don`t need to grow everything yourself. With a franchise or license agreement, you can recruit other contractors to help. If you cross, you allow someone else to open a store or restaurant – for example McDonald`s – on your model. A license agreement allows another company to use your trademarks and logo.

Normally, licensees are not as tightly controlled as franchisees. A license agreement is a written agreement between two parties in which one property owner allows another party to use that property under certain parameters. A license agreement or license agreement typically includes a licensor and a licensee. Your system and written contract determine whether you are a licensor or a franchisee. Even if you have licensing agreements with licensees and do not consider yourself a franchisee, the Australian Competition and Consumer Commission (ACCC) may actually classify you as a franchisee. licensing refers to an agreement between the licensor and the licensee, under which the latter acquirer would have the right to use products and goods if ownership remains in the hands of the licensor, while Franchising refers to an agreement between the franchisee and the franchisee under which the latter enjoys ownership of a business on behalf of the licensor. the franchisee instead of a royalty; if the processes are strictly controlled by the franchisee. Products and goods, while the franchising model is more used in the service sector. In addition to the details of all parties, license agreements set out in detail how authorized parties can use the features, including the following parameters: Setting up a franchise system may cost more than entering into licensing agreements, but franchise agreements give you more control over how the franchisee operates. This will allow you to set up a common marketing plan for all franchises, oversee the franchisee`s performance, and determine the specific methods the franchisee will need to use, including store uniforms, location, and equipment. A franchise agreement is also a type of agreement, but it differs from a license agreement by giving the franchisee greater control over how the franchisee uses the franchisee`s property.

Franchise agreements typically contain specific guidelines on how a franchisee should manage their business. Disney`s main competitor, Warner Bros., also derives a significant portion of the revenue from the intellectual property it owns, with DC Comics offering massive licensing opportunities for toys and clothing.

About the Author

Newt Rayburn founded THE LOCAL VOICE in 2006. Previously, Newt was Editor of PROFANE EXISTENCE in Minneapolis, Minnesota, and Art Director for Ole Miss' LIVING BLUES magazine. Newt won a National Magazine Award in 1999 for his SOUTHERN MUSIC ISSUE with THE OXFORD AMERICAN. A seventh-generation Lafayette County, Mississippian, Newt is perhaps best known as the leader of the Mississippi RocknRoll band THE COOTERS, but he also has the Country & Southern Rock group, HAWGWASH. Newt is a Photographer, Writer, and Civil War Enthusiast.

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