Have you ever wondered whether licensing or franchising is the best model to grow your business? Many people wanting to avoid the cost and regulation of franchising will consider licensing as an alternative. But is licensing your business model really an alternative to franchising? What is licensing anyway and what is the difference between a franchise and a licence?
Firstly you cannot convert a franchise to a licence simply by changing the name at the top of the document. The label given to the arrangement has no influence over the legal effect of the arrangement. Franchising is just a form of licensing.
Whether the relationship that you wish to establish is really a franchise or a licence can be determined only in one way. The Franchising Code of Conduct defines certain arrangements as a franchise. The code provides that if certain ingredients are present then a franchise exists.