Another value of licensing is that many people do not understand their true purpose. There is a great deal of confusion about when a licensing agreement should be established and when the licence agreement sets the legal limit for a franchise. Be sure to check with a competent lawyer before signing a licensing or franchising agreement. Disney`s main competitor, Warner Bros., also derives significant revenue from the IP business it owns, with DC Comics offering massive licenses for toys and clothing. Even the magical world of Harry Potter is the result of a licensing agreement. As Warner Bros. does not own theme parks, it has decided to grant its amusement parking rights to Universal Studios to take advantage of the Harry Potter IP. Licensing agreements are often seen as a cheaper alternative to a franchise agreement, as there are fewer upfront costs and less operating costs during the business relationship for the licensee. Licensees generally determine their own marketing strategies and systems for the operation of their business. When is a licensing agreement not a licensing agreement? When it turns into a franchise. Ba-Boom. It sounds like a joke, but it`s actually a serious issue that even the most thrifty entrepreneurs are looking at when they start or grow their business. As a franchisor, you have more control over the branding and operation of your franchisee, but you will also be subject to more obligations under the Franchise Code of Conduct and could be punished for infringement.
Even if the code does not comply with the contract you have with your partners as a franchisor, the law still requires you to abide by it. If you break the code, the franchisee can claim damages or you may be hit by the courts with fines. A franchised contract is also a kind of contract, but it differs from a licensing agreement by giving the franchisor more control over how the franchisee uses the franchisee`s ownership. Franchise agreements generally contain specific guidelines on how a franchisee should manage its business. (a) Brand License – A trademark license, i.e. you license and use your name or brand to duplicate your business and create a new site or service area; If you`re looking at franchise agreements against licensing agreements, it`s probably because you want to either start your business in a franchise business or lend your brand to another company for use. It is essential to know the differences between these two enterprise agreements before moving to a legally binding agreement. To find out if you have a franchise agreement, ask yourself the following questions: Keep in mind that even if you and your business partners consider your agreement to be a licensing agreement, if you meet the most important criteria, the ACCC must consider you a franchisor and abide by the franchise code of conduct.