Questions about selecting a franchise system
In this section, experts answer the questions most commonly asked by franchise candidates on how to search for and select a franchise system.
What are the differences between a licence system and a franchise system?
When granting a licence, the services provided by a licensor are generally limited to transferring technical know-how, which may include how to manufacture a product, use specific software or the right to use patents or brand names. Licence agreements do not normally include the provision of know-how to the licensee on how to run the business nor do they include support for the day-to-day running of the business.
Whilst additional service packages are sometimes offered within a licence system, these are generally offered on a voluntary basis and involve additional costs for the licensee.
The limited service packages offered when a licence is granted means that the work and costs involved are considerably lower for a licensor compared to that of a franchisor. A licensor, however, receives lower royalties than would be needed to provide the services required for a franchise system.