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What is franchising?Licensing vs franchising
Licensing only grants the right to use intellectual property; franchising also transfers the operating system, training and control over standards — a far tighter relationship.
Definition
Licensing only grants the right to use intellectual property; franchising also transfers the operating system, training and control over standards — a far tighter relationship.
Where this sits
Franchising is a business model in which a brand owner licenses its brand, operating system and know-how to an independent partner in exchange for fees and royalties. The brand scales through the partner's capital and effort while keeping standards consistent.
Related terms in this topic
FranchisorThe brand owner who owns the system, licenses the brand and know-how to partners, and is responsible for training, support and upholding standards.
FranchiseeThe independent partner who invests to open and operate an outlet to the system's standards, paying fees and royalties to the brand owner.