FRANCHISE

LICENSING

VERSUS

CLASS – PGDRM 05 SUBJECT – INTRODUCTION TO RETAIL SUBMITTED TO – SUBMITTED BY - GROUP 6 MEMBERS – 1. ANKITA TYAGI 2. ADITI THAKRAL 3. DILIP KUMAR 4. MEGHA KAUSHIK 5. NALIN AWASTHI 6. RAHUL TIWARI

INDEX OBJECTIVE  WHAT IS FRANCHISING?  WHAT IS LICENSING?  ADVANTAGES OF FRANCHISING  DISADVANTAGES OF FRANCHISING  ADVANTAGES OF LICENSING  DISADVANTAGES OF LICENSING  COMPARISION  RECOMMENDATION  .

.OBJECTIVE  The aim is not only to depict the meaning of franchising and licensing but also the contrasting relationship between franchising and licensing followed by the recommendation.

processing. technical know-how and expertise of the innovator (franchisor) to be combined with the energy.  Franchising encompasses products and services from the manufacture. industry and investment of another party (franchisee) to conduct the business of providing and selling of goods and services. (goodwill) innovation. the marketing of those services. distribution and sale of goods. supply for manufacture. their distribution and sale. to the rendering of services.WHAT IS FRANCHISING? Franchising may be defined as a business arrangement which allows for the reputation.  .

In a Trade Mark license. the product or name for a fee without censure. There is usually no training component. The license allows the licensee to use make and sell. design. product development strategy and limited marketing support. the licensee will be granted full privilege to use the Trade Mark on goods or services provided that the use is in accordance with agreed signage protocols and quality guidelines.WHAT IS LICENSING?     A license arrangement is a business arrangement where a licensor via a monopoly right such as a Patent. for example. a design or a copyright has to exclusive right which prevents others from exploiting the idea. name or logo commercially. a Trade Mark. .

advertising. recognition  Shared marketing. defined territory or geographical boundaries  Proven brand. trade mark.ADVANTAGES OF FRANCHISING Freedom of employment  Proven product or service outcomes  Semi-monopoly. business launch campaign costs  Industry know-how  Reduced risk of failure  Access to proprietary products or services  Bulk buying advantages  On-going research and development  .

 whereas franchisees can expect to pay royalties on a go-forward basis  The franchise agreement usually includes restrictions on how you run the business.DISADVANTAGES OF FRANCHISING High initial investment and ongoing charges. You might not be able to make changes to suit your local market.  Other franchisees could give the brand a bad reputation.  All profits are shared with the franchisor  The franchisor might go out of business due to bad happenings  .

ADVANTAGES OF LICENSING       A license agreement that gives access to technologies which are already established or readily available can make it possible for an enterprise to reach the market faster. . when paired with the company’s current technology portfolio. can create new products. A license agreement can give an enterprise access to technical advances that would otherwise be difficult for it to obtain. licensees usually don't receive exclusive territorial rights. licensee is expected to establish its own identity in the marketplace. licensing company is free to sell similar licenses and products to other people in the same geographic area. services and market opportunities. There may also be licensing-in opportunities which. A license can also be necessary for the maintenance and development of a market position that is already well established .

to limit the markets in which you may use the licensed technology or to limit the acts of exploitation allowed under the licensing agreement. to negotiate licence agreements with competitors. An IP licence may add a layer of expense to a product that is not supported by the market for that product. who could choose to not renew a licence agreement. The relationship between licensees and the licensing company is not strong . I Licensing may create technology dependence on the supplier. or that must be modified to meet the licensee’s business needs.DISADVANTAGES OF LICENSING     The licensee may have made a financial commitment for a technology that is not ‘ready’ to be commercially exploited.

they get to leverage some amount of territorial exclusivity in addition to control over the products and services offered. This also goes a long way in providing a visible presentation of the relationship between the two.     The relationship between a licensee and the parent company is not as tight-knit as a Licensee franchisor relationship. The franchisee gets to retain the rights to the franchisor’s logo and trademark. Also. .COMPARISON FRANCHISING  LICENSING      In franchising. licensee does not hold the rights to the trademark and logo of the parent company’s brand. licensees do not get to have territorial rights from the parent company. the franchisee is expected to create its own niche and identity in the market. Licensees also do not receive the same extent of support and training as compared to a franchisee. Franchisees are often an extension of the parent company. in that they represent the parent company’s brand and image. They are usually provided some level of training and support. Which means that licensing organization gets to sell similar licenses and products in the same geographical area. the franchisee and the franchisor are very closely linked and have better working relationships.

once the licensee is able to successfully set up its business and spin off on its own. . licensing has its advantages as well. While a franchising business may require you to pay royalty every time a profit is made. the relationship between licensee and the parent company is restricted to the frequent purchase of products. a licensing opportunity does not demand such an expense. One advantage is that licensing costs much lesser in terms of the initial investment and ongoing charges. Also.RECOMMENDATION  A licensing opportunity seems to be less advantageous as compared to a franchising business.