Question

the difference between Licensing and Franchising

Answer 1

Answer :

First understand the definition of both the terms,

Licensing means where licensor gives right against some payment to licensee to produce/manufacture anything.

Franchising means where franchisor gives right against some payment to franchisee to use a whole business.

Now comes to difference of both terms,

The element used in licensing is only limited upto products or single product. And in franching it can extend upto a whole of business under the franchisor brand name. The payment used in licensing is termed as royalty and in franchising it is management fees. Licensing term can be of 18-20 years and franchising term can be of 5 years and can extend upto 10 years sometimes.