What Is the Difference Between a Franchise Relationship and a Trademark Licence Relationship?

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Table of Contents

• What is a trademark license?
• On the other hand, a franchising relationship is….
• Key differences between the two?

What is a trademark license?

You can describe a licensing partnership as a business transaction; the licensee buys the rights to use  intellectual property (trademarks, images, logos, specific information etc.) from the licensor, who is the owner of this intellectual property.

You need to make sure that the licence:

1.      Gives you the rights to the right intellectual property;

2.      There is evidence that the intellectual property is legally protected (where applicable);

3.      Outlines your rights and obligations relating to the intellectual property; and

4.       It clearly states the fees you are required to pay for this licence.

On the other hand, a franchising relationship is….

A partnership where the franchisor allows a franchisee to use its business system in exchange for payment. When you purchase a franchise you are essentially purchasing a right to market and distribute the franchisor’s goods and/or services for a set period of time. The relationship between the franchisor and the franchisee can also be seen as a business partnership; the overall gains of the business will depend on the joint efforts of both the franchisor and the franchisee.

Key differences between the two?

Essentially, in a franchise agreement, the franchisor has control over the operations and procedures of the franchise. For example, the franchisor has control over the way in which you market the products and/or services. The franchisor sets minimum performance targets for you, as a franchisee, to reach and the franchisor determines the procedures and policies which you are to follow in your franchise business (often set out in manual).

In a license relationship, you typically have more freedom with regards to the use of the intellectual property. As it is confined to certain trademarks, it is a far less complex arrangement and therefore, contains fewer obligations on the parties. To get in touch with a franchise lawyer, contact LegalVision on 1300 544 755.