The Difference Between Franchisee and Licensee (Part B)

Advantages of Being a Franchisee

There are some distinct disadvantages to choosing to become a licensee versus a franchisee. Your New Jersey business attorney can talk to you about how the distinction would impact your unique situation.

Franchisees receive significant support and help in running the business whereas a licensee is essentially left to fend for themselves. This lack of parent company support can increase the risk that the fledgling business will not succeed. On the other hand, with ongoing support in a franchise, there is greater opportunity for success.

There are a few specific advantages that can be found in franchises, some of which include:

• Services and products are proven and have an established reputation;
• Costs for marketing, advertising and launching the business are shared;
• Less chance of business failing;
• Perks of bulk buying; and
• Continuous development and research of products and services.

Similarities of Being a Franchisee and Licensee

Both franchisees and licensees are required to sign an agreement or business contract of some sort. It will either be a franchise agreement or a license agreement.

A franchise agreement will include the terms and conditions that both parties must abide by. A franchise agreement covers everything from the training to be received to the ongoing support that is provided.

With a license agreement, the licensor maintains exclusive rights, whether through a patent, trademark, copyright or design. These rights protect the licensor's creations from theft.

Whether you are entering into a franchise agreement or a license agreement, the conditions should be simple and clear. Your New Jersey business attorney should examine the documents before you sign anything.

Contacting a New Jersey Business Attorney

Becoming a franchisee or a licensee carries significant financial and legal implications. Never sign any business agreement without first consulting with a New Jersey business attorney who can inform you of your rights and responsibilities upon entering this contract.

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