'license' vs. 'franchise'

Question

Hi,What is the difference between 'license' and 'franchise' (Business English). I've read their definitions in many dictionaries but still haven't understood them clearly.Many thanks,Nessie.

Nessie000 · Accepted Answer

Hi, could anybody help me, please? (It's not that I'm so lazy not to look up in the dictionary, but I just can't understand)

Thank you very much,
Nessie.

AlpheccaStars · Answer

Hi!
A license is an official permission, usually granted by the government to do something (usually an individual basis). It is usually competency based - I have to take a test to prove that I am competent.
For example, my friend pays for a hunting license, which allows him to shoot a wild turkey for Christmas. I pass a test, pay some money, and get a driving license. My beautician has a license to cut and color hair. It shows that he has passed a test of knowledge or competency in hairdressing. Licenses can be revoked if you break the rules.
A Franchise is an agreement with a corporation, usually a manufacturer, (sometimes also with the government) for you to exploit and profit from their patents, copyrights, business model, business relationships, name recognition etc. So you can buy a franchise from MacDonald's and open a hamburger stand; selling the products and services that are the intellectual (or even physical) property of MacDonald's corporation. An automobile dealership also can be a franchise relationship with the manufacturer. A franchise agreement comes with specific rules. For example, I might not be permitted to sell Pepsi Cola in my stand if MacDonald's has a corporate agreement with Coca Cola. MacDonald's would have the right to inspect my service and products for quality.If I am damaging their reputation by selling poor quality products, then they can cancel my franchise. They may also require me to take corporate classes in how to run one of their franchise operations.

If my beautician wants to open a hair salon, and be a business owner, he could choose to buy a franchise from a corporation that has a name brand in hair salons. So he would have a both a license (from the state) and a franchise (from the major corporation).

Clive · Answer

Hi,
Businesses often enter into licensing agreements wih each other, for example with regard to products, trademarks and technologies.

Here are a few links you might like to look at.

http://www.yet2.com/app/insight/insight/20010401_landgraff

http://www.goldmarks.net/controvn_lic_exp.shtml

http://www.licensingexpo.com/index.php/coca-cola-on-tap-at-six-leading-restaurant-chains/

http://www.gamezone.com/news/05_18_05_09_52AM.htm

Best wishes, Clive

AlpheccaStars · Answer

Clive is correct about corporate licenses. If a company owns some intellectual property, it can grant a "license to use" to another company. Examples are a manufacturing process or rights to use a patent. These are particular and individual contract agreements.
What makes a franchise different, is that the franchise is a standard offering to multiple people, and is a program that continues for years. There are many franchisees that can buy into the same standard franchise agreement. The rules and obligations in the franchise generally apply to all of the franchisees. Most of the time, a franchise is a "package" deal that includes brand identity, advertising, products and services as well as payments and profits to be returned to the franchiser.

MrFranchise · Answer

Every franchise contains a license (right to use a brand and method of operations), while some licenses may be franchises in disguise.

There's a good franchise vs. license article on the Franchise Foundations website about this topic.

Mr. Franchise
Kevin B. Murphy, B.S. M.B.A., J.D.

Anonymous · Answer

When you license something you have permisson from the organization to use their likeness for your specific purpose. When you franchise you own a part of an organization.
Example: Say you own a store and want to use the NFL to advertise. I.E. a photo of an NFL player walking into your store, then you will need a liscense to use the NFL property. But if you were granted an expansion team then you would franchise your team as part of the NFL. Meaning you would gain all the profits generated by your team but you would still have to adhere to the laws and policies of the NFL.

Anonymous · Answer

hi
its the almost the the same ,but the factor is that it agreements terms differs ,may be they provide assistance when it comes to franchise
akash

Anonymous · Answer

have a look at these sites, i found them helpful enough;

http://www.differencebetween.com/difference-between-franchising-and-licensing/

http://www.bizymoms.com/franchises/articles/licensing.html

'license' vs. 'franchise'

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