Using Examples: How Is Franchising Different From Licensing?

775 Words4 Pages
Using examples, explain how franchising works. How is franchising different from licensing? Franchising is a business model with contractual entry which enable many different entrepreneurs or franchisees to share a single brand name, trademarks, strategies and other assistance like training and advertising with the franchiser by paying an initial fee and continuous royalties based on the franchising agreement. It allows the parent company to expand their market coverage with more branches or stores or services faster and less expensive when those were owned and operated by franchisees. The franchising is different from licensing as following. A) Franchising allows the parent company with higher level of control over its products, services, trade secrets, company guideline and strategy to protect their brand image in a target market or geographic location. B) Franchising is more commonly used in service sector unlike licensing is more applicable in manufacturing industries or just simple use of an image of celebrity, characters or property.…show more content…
Benefits: Consider any potential benefit from local or state government subsidy or tax reduction. Some region support special tax reduction with negotiation such as Ireland, state government in the US, many of China cities or provinces, Singapore, Malaysia government, etc. Consider any additional benefits with local presence of manufacturing such as better local market access for better preference or brand awareness by local customers, better government relationship for other preferential support to expand business in local market as part of the competitive
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