A licence grants someone the permission to use a product, design, technology, or trademark in their own ventures, leaving little control or rights to the licensor. A franchise, on the other hand, allows a franchisor greater control over a business, giving another party (the franchisee) the right to open a business modelled after the franchisor’s business that has an established name and reputation.
Licensing is generally cheaper than franchising, however franchisees are offered additional benefits in a franchising agreement by being granted exclusive location rights to sell their product or service. Franchisees are also given support by franchisors which may include management training, financial assistance, and ongoing guidance throughout the life of the agreement.
The decision whether to enter into a franchise agreement or licence agreement will come down to the purpose of the business. It is vital to get competent legal advice before entering into either a franchise agreement or licence agreement.