Brand Tuned - Smart Thinking, Better Branding

Shireen Smith (from YouTube) - Part 2 Licensing And Franchising, What Is The Difference And Does It Matter?

September 14, 2020 Shireen Smith Season 2 Episode 34
Brand Tuned - Smart Thinking, Better Branding
Shireen Smith (from YouTube) - Part 2 Licensing And Franchising, What Is The Difference And Does It Matter?
Chapters
Brand Tuned - Smart Thinking, Better Branding
Shireen Smith (from YouTube) - Part 2 Licensing And Franchising, What Is The Difference And Does It Matter?
Sep 14, 2020 Season 2 Episode 34
Shireen Smith

When it comes to licensing a business format, whereby you grant a third party the right to replicate your business, the important point is that franchising traditionally involves a number of formalities and costs that you can avoid when you choose the licensing route

  • One way to scale their business is to issue a licence to a third party to deliver a related product under their brand name
  • Grant a licence to someone to sell your product under their own brand name
  • Luxury brands are highly sought after for licensing, as their brand brings a cachet to the product to which they lend their name
  •  Pierre Cardin is a classic example of this, by engaging in indiscriminate licensing, it devalued its brand and lost much of its cachet
  • One of the key issues is how ownership, control and use of the brand can be spread between different businesses
  • Why the Distinction Between Franchising and Licensing Matters
  • It’s not possible to escape the regulators’ attention by passing off a franchise as a licence because the law looks at the essence of an arrangement rather than its name
  • Business owners in the UK can, therefore, be misled into believing that franchising is their only option
  • Franchising gives you the potential for national and international expansion, rapid growth with lower capital outlay.
  • My suggestion, if it would work for your business model, is to give yourself time to evaluate whether franchising is the right option by testing the waters with licensing first
  • Licensing is a type of legal agreement for exploiting IP that is highly flexible
Show Notes

When it comes to licensing a business format, whereby you grant a third party the right to replicate your business, the important point is that franchising traditionally involves a number of formalities and costs that you can avoid when you choose the licensing route

  • One way to scale their business is to issue a licence to a third party to deliver a related product under their brand name
  • Grant a licence to someone to sell your product under their own brand name
  • Luxury brands are highly sought after for licensing, as their brand brings a cachet to the product to which they lend their name
  •  Pierre Cardin is a classic example of this, by engaging in indiscriminate licensing, it devalued its brand and lost much of its cachet
  • One of the key issues is how ownership, control and use of the brand can be spread between different businesses
  • Why the Distinction Between Franchising and Licensing Matters
  • It’s not possible to escape the regulators’ attention by passing off a franchise as a licence because the law looks at the essence of an arrangement rather than its name
  • Business owners in the UK can, therefore, be misled into believing that franchising is their only option
  • Franchising gives you the potential for national and international expansion, rapid growth with lower capital outlay.
  • My suggestion, if it would work for your business model, is to give yourself time to evaluate whether franchising is the right option by testing the waters with licensing first
  • Licensing is a type of legal agreement for exploiting IP that is highly flexible