Franchise Agreement Or License

Remember that even if you and your business partners consider your agreement to be a licensing agreement, if you meet the most important criteria, the ACCC must consider you a franchisor and abide by the Franchise Code of Conduct. In all of these examples, the licence grants a limited right to a particular asset, whether it is a brand, a technology or a formula. The agreement that establishes the relationship between the taker and the licensant is referred to as a “licensing agreement” and, while the licensing agreement will limit what the licensee can or cannot do with the acquired asset, the license agreement does not allow the donor to exercise control over the overall operation of the taker`s activity. The McDonalds/Disney example allows Disney to have a say and control how McDonalds brands use Disney on McDonald`s Happy Meals, but Disney has no control over all of McDonald`s business. All of these criteria must be met in order for an agreement to be considered a franchise agreement. If you answered yes to all of these questions, it is very likely that you have a franchise system and that the franchising code of conduct applies. A license is a limited legal relationship. A franchise is a broader legal relationship that involves a license. If your goal is to expand and develop your brand through additional outlets or service spaces, then franchising is the right legal model and licensing is not an alternative. Learn more about licensing vs. Franchising, you`ll find the guide. To learn more about converting your license system to franchise, click here. To learn more about franchising your business, click here.

This can make running a business with a licensing agreement and running a franchise business a comparable cost. Another consideration is cost. A licensing agreement will cost less than entering into a franchise agreement. However, since you receive little or no help when you run a business with a licensing agreement, you are responsible for all other business-comma costs that would normally be included in a franchise fee.