Franchising & Licensing, Business expansion and growth becomes a challenge for many small and medium sized enterprises mainly due to lack of access to capital. In modern business environment the concept of franchising provides an alternative solution to this barrier, besides offering several additional benefits. As a result, in the past few decades franchising has emerged as a popular expansion strategy.
In a franchise the franchisor has the ability to use other people’s money to expand the business while remaining largely free from liability for any debts or cost of equity. The franchisee provides all the capital to open and operate a unit and in return is entitled to benefit from the franchisor’s method of doing business with lower risk of failure; lower startup costs; existing recognition of franchisor’s brand; and the operational/ marketing support and training offered by the franchisor.
Another similar method that is frequently employed by businesses for expansion purposes is called ‘Licensing’. Licensing is a concept according to which for a specified payment the licensor grants limited rights to the licensee to benefit from a particular asset, whether a patent, trademark, copyright, design, technology, formula, or other legal rights.
The main difference between licensing and franchising is that licensing is a legal relationship that is limited in scope and relates only to the use of the licensed asset. On the other hand, going beyond the scope of licensing, a franchise forms a relationship of control between the franchisor and the franchisee and requires that the franchisee operate the underlying business strictly in conformity with the systems and procedures provided in the franchise agreement. Which business model out of the two would be suitable for you at a particular point in time depends on the nature of your business; your objectives, preferences, personality, and management style.
Whether you are a franchisor or a franchisee, Axiom Mark attorneys understand your core interests and are well-equipped to provide you with a wide range of services encompassing the following:
- Rendering professional advice on a broad range of issues relating to Franchising & Licensing in light of the related practice and legislation of a specific country/ region
- Drafting, negotiating, reviewing, and registration of Franchise/ License Agreements
- Professional/ legal assistance in relation to enforcement of rights
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