Franchise versus. LicensingFranchising and licensing are ways to grow a business. These two terms are often confused. However, franchising and licensing are two separate areas. A complete difference is shown in the following table. Definitions Franchising is a business model in which you purchase a license from a specific company. Franchise Fee {License Fee} gives you the right to open a franchise of that particular business, using trademarks, signage, products, software, business systems, etc. Franchising is a term that can be applied to almost all areas of economic activity. Franchising encompasses products and services from manufacturing, supply for manufacturing, processing, distribution and sale of goods, to provision of services, marketing of these services, distribution and sale. Licensing involves granting permission to use intellectual property rights, such as trademarks, patents or technologies, under defined conditions. It prevents third parties from commercially exploiting the idea, design, name or logo. This is a commercial arrangement in which a local company in the host country produces goods according to the specifications of another company (the licensor company); as goods are sold, the local business gets to keep a portion of the profits. Agreement A franchise agreement is a specialist license and will cover all aspects of intellectual property, user obligations and usage arrangements. A right such as a patent, trademark, design or copyright has an exclusive right that prevents third parties from commercially exploiting the idea, design, name or logo. Ongoing Commitment In the franchise agreement, there is an ongoing commitment in effect that you are: In business for yourself but not for yourself! In a licensing agreement or business opportunity, there is no “royalty or required relationship” going on, in fact you are: In business for yourself and by yourself! Time Required to Complete Deductibles take months to complete. It takes approximately ten to fifteen business days. Separate Areas of Law Franchising is based on securities law. This means that compliance with franchise laws, such as securities laws, requires registration of the franchise in applicable jurisdictions. Licensing is a form of contract law. This means that the license is simply a contract between two independent contractors and franchise registration is not required. The franchise process creates more work for lawyers who must comply with all registration requirements. When it comes to licensing, this requires much less legal work. Amount of Control The parent company has very tight controls over all aspects of your business, but it also provides a lot of help in managing and marketing your store..