Basic differences between a Franchise and a License Agreement



Elements A Franchise, at its very basic state, has these elements:

  •   Common   Brand
  •   Common   Operating System AND
  •   Payment   of either an initial fee or ongoing fees from Franchisee to Franchisor
A License agreement is usually missing one of the Franchise   elements. The most common form of  a   license agreement has the following elements:

  •   Common   Brand and/or
  •   Payment   of a fee to Licensor
Agreement Typical Agreements include:

  •   Training
  •   On-going   Mentoring
  •   Technical   Advice from Franchisee
License agreements do not get much ongoing support from licensor
Relationship Close Relationship between Franchisor/Franchisee Loose relationship with minimal communication
TM/Logo and Territory Franchisee has the rights to use the Trademark and/or logo of parent   company (Franchisor) and are typically given territorial rights Licensee is not given the right to use the parent company   Trademark or logo; they are expected to market their own brand and build   their own presence/identity in the marketplace.