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April 15, 2021

What Is The Difference Between A License Agreement And A Franchise

Filed under: Uncategorized — admin @ 1:16 pm

A license is a legal relationship in which a party called a “licensee” grants the other party, known as a “licensee,” the right to use or benefit from a trademark, technology or other legal rights. Examples of licences are as follows: The Australian courts have found that the following practices push “licensees” into franchise territory: If you have answered in the affirmative on all of the above points, you are likely to operate under a franchise agreement. Whether you`ve signed a contract with another name (z.B. a licensing agreement), you`re still considered a franchise- Did you know that if you buy a pair of Calvin Klein underwear, it`s not really made by Calvin Klein? The only clothes that Calvin Klein makes itself are some of its women`s lines. Any other Calvin Klein clothing you buy, including perfume and jeans as well as their famous underwear, are the result of a licensing agreement. The manufacturers of these products have authorized the Calvin Klein name and logo to sell their own products. Compared to a license, a franchise will look much more expensive and more complicated. The initial deductible fee can cost between $10,000 and $50,000 — and then you have to meet the operating costs. This may seem exorbitant, but it`s important to remember that you have access to an entire business. In comparison, by a licensing agreement, you only have access to the use of certain brands in certain ways. So a license will be cheaper and less complicated, but it also gives you access to much less.

Franchising also has the advantage of a common relationship. The franchisor can quickly expand its business while minimizing some of the work done by franchisees. In addition, the franchisee works with the franchisor to manage the business and learn business skills that they may not yet know. In general, a franchise agreement is a much stricter and more complicated agreement. There are many moving parts within a franchise agreement for which a licensing agreement is a simple loan of protected trademarks or images. Another value of licensing is that many people do not understand their true purpose. There is a great deal of confusion about when a licensing agreement should be established and when the licence agreement sets the legal limit for a franchise. Be sure to check with a competent lawyer before signing a licensing or franchising agreement. Your system and written contract determine whether you are a licensee or a franchisor. Even if you enter into licensing agreements with licensees and do not consider yourself a franchisor, the Australian Competition and Consumer Commission (ACCC) can effectively qualify you as a franchisor. Compared to franchises, another positive aspect of a license is the simplicity of the agreement.

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