Franchising is one of the most universal trouble formats nowadays. Habitual designation brands such as McDonalds and Subway are international franchise head brands. All franchise agreements are licensing agreements nevertheless not all licensing agreements are franchises. The Federal Commerce Comission (FTC) has outlined franchise rules and regulations in the USA.
Grant of License
Both franchise agreements and licensing agreements include one leading commonality: they both grant a licence from one banquet to another. The grant of licence typically involves a core product, avail, means, way, or fame Trade-mark.
Royalties and Fees
All of the decisions made around licensing vs. franchising is dependent upon the facts and circumstances of the licensing agreement. A qualified franchise or business attorney should always be consulted when reviewing licensing or franchising documents.
Use of Trademarks and Name Brand
The final component of defining a franchise is the use of trademarks and name brands. If a licensee is allowed to use the name brand and trademarked logo, then the licensee is also a franchisee.
Three-legged Definition
For a licensee to be legally considered a franchise by the FTC it needs to meet most of the three requirements regarding royalties, operating procedures, and trademarks.
One of the three distinguishing characteristics that makes a licence a franchise is the bill of royalties by the franchisee to the franchisor. Any licence requiring a licensee to remuneration royalties of $500 or else in six months is typically considered a franchise.
