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Understanding the difference between franchising and licensing

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If you’re running a successful business, congratulations! That’s a very difficult thing to achieve. But even more impressive is when you can grow that business out of your original location. Typically there are two ways to do this: either franchising, or licensing. Let's go over these one by one.


To understand franchising, you have to consider exactly what it means. In the United States, at least for most of the time, a franchisor indicates the person who is running the branch of the business typically called a franchisee, the option to use the owner’s trademark and work within their goods. In return, the owner is paid for such materials.

The major issue is for many of these organizations, the cost is so prohibitively expensive that there really are very few advantages of franchising. Yes, it’s true – many lawyers will advise you to do it. But what you’re not realizing, at least at the beginning, is that these lawyers are paid massive fees if someone signs up – often to the tune of tens of thousands of dollars. But your life should be about filling up your own pockets, not some franchise lawyer’s pockets. So what’s the alternative?


Licensing is the better solution – and as an added bonus, licensing falls completely within the franchise laws, except that you don’t need to offer disclosure papers, or register, according to the rules, saving your more than fifty-thousand dollars in cold, hard, cash. Not a bad choice for any business owner.

So if you’re considering your options, ignore what anyone says about the advantages of franchising, and learn the truth from a site like – they know what they’re talking about and will provide you with the information you need to make an informed choice. That choice, of course, will nearly certainly end up being to go with licensing rather than franchising. After all, money is important to your business, right?


It always does seem like an uphill climb when you want to start a new business, doesn’t it? You’ve got worry about planning, pricing, the building, the name, the equipment, the timing…. And then, of course, the funds.

That’s the big one. The others sounded stressful enough, too; nothing, though, beats the idea of having to need the money just to start it all up. It’s not like you have that trust fund sitting in your backyard waiting to be spent on your new hot dog stand. This is why you should understand how licensing and franchising can play an integral role in funding other ventures.



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