{"id":1605,"date":"2022-01-11T02:28:06","date_gmt":"2022-01-11T02:28:06","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=1605"},"modified":"2024-05-22T06:53:52","modified_gmt":"2024-05-22T05:53:52","slug":"licence-vs-franchise-agreement","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/franchising\/licence-vs-franchise-agreement\/","title":{"rendered":"Licence vs Franchise Agreements in the UK"},"content":{"rendered":"\n

If you are looking at ways to grow your business<\/a>, you may come across licensing and franchise agreements<\/a>. A licensing agreement or a franchise agreement can greatly benefit your business, but knowing which one is best requires some research and will also depend on your specific business. This article will offer an overview of the key differences between a licence agreement and a franchise agreement. Additionally, it will advise when you might prefer one over the other.<\/span><\/p>\n\n\n\n

What is a Licence Agreement?<\/span><\/h2>\n\n\n\n

A licence agreement is where one business owner (the licensor) grants a business (the licensee) the right to use something that belongs to the licensor. It is often intellectual property licensed, such as the licensor’s brand name or trademark. The licensee will pay a licence fee for the benefit they receive from using a pre-established brand. <\/span><\/p>\n\n\n\n

If you are looking to be a licensor, you can benefit from a licence agreement in two ways. First, you can benefit from your brand getting more exposure. This is especially useful if the potential licensee will be in a market in which you do not operate yet. For example, if you do not have a perfume product and a licensee wants to sell perfume with your brand name, you will be expanding your brand into a new market<\/a>. Second, you will also profit from the licence fee that the licensor will pay. Sometimes, this can be an ongoing fee. <\/span><\/p>\n\n\n\n

If you are looking to be a licensee, you can also benefit from a licence agreement. Using a pre-established brand for your business will save you costs in developing your own brand image. In addition, some brands can be <\/span>highly valuable commercial symbols for new businesses. <\/span><\/p>\n\n\n\n

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Additionally, you can enter into a licence agreement for more than just the use of a brand image. For example, you may wish to make use of certain technologies that a licensor has. All in all, the value you receive from a licence agreement will usually be in the money that you save from not having to develop the subject of the agreement yourself.<\/span><\/p>\n<\/div>\n\n\n\n

What is a Franchise Agreement?<\/span><\/h2>\n\n\n\n

Franchises are quite similar to licence agreements. They entail the franchisee paying an ongoing fee<\/a> to the franchisor to use something that the franchisor has. Usually, this includes the brand image.<\/span><\/p>\n\n\n\n

The key difference between a licence agreement and a franchise agreement is that a franchise agreement will usually grant the franchisee access to the franchisor’s business model<\/a>. For example, if you enter into a franchise agreement with McDonald\u2019s, you may have access to McDonald’s: <\/span><\/p>\n\n\n\n