In general, licensing agreements are most commonly used by brands that are highly recognizable and marketable. For a licensing agreement to be beneficial to both parties, business branding must already be successful and be known to a large part of the buyers. With licensing, the investor receives a specific item. A license allows the licensee to use, create and sell an idea, design, name or logo for a fee. It is a limited right related to a particular asset, not an entire business. The license agreement limits what the taker can or cannot do with the asset granted, but the license agreement does not allow the giver to exercise control over the overall operation of the taker`s activity. Owning a franchise allows a person to become independent while investing in a proven system, with training and support. It brings a finite clientele and often comes with offers from customers. The risk of failure, ongoing research and development and semi-monopoly in a given area is less.

For franchisors, franchising allows them to expand their business for less investment than to open new sites themselves. If you are thinking of opening a Canadian business through an established brand, you have probably reached the terms “licensing” and “franchise.” These two economic models are not identical and it is important to understand the differences. These features are precisely the reason why Pizza Hut/Dominos cannot enter into a licensing agreement with an interested party and may allow them to use their name to sell their own pizza recipe. For these niche companies, the value of the brand is at stake after years of struggle. They therefore enter into a franchising agreement; allowing other people not only to use their name, but also to learn technical know-how, art, skill and knowledge, to make the product exactly as they would in exchange for royalties. Compared to a license, a franchise will look much more expensive and more complicated. The initial deductible fee can cost between $10,000 and $50,000 — and then you have to meet the operating costs. This may seem exorbitant, but it`s important to remember that you have access to an entire business. In comparison, by a licensing agreement, you only have access to the use of certain brands in certain ways. So a license will be cheaper and less complicated, but it also gives you access to much less.

(c) Payment of an initial fee – you will receive a down payment or a fee, that is, at the time of issuing your licence or entering into a contract, you will receive a fee, i.e.: You will receive a deductible fee, licence fee, inventory fee or whatever you call. 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.