Franchises and licenses are both business agreements in which certain brand aspects are shared in exchange for a fee. However, a franchising agreement pertains to a business’s entire brand and operations, while a licensing agreement only applies to registered trademarks.
Full Answer
What is the difference between licensing and franchising?
A) Franchising involves short-term commitments when compared to licensing. B) Franchising is employed mostly by manufacturing firms. C) Franchising requires franchisees to agree to abide by strict operating procedures. D) Franchising eliminates any claim that the franchisor may seek in the future profits following the franchising agreement.
What is the meaning of the term “franchising”?
Franchising: It is an agreement between two parties where one party (hereafter referred to as the franchisor) permits another party (hereafter referred to as the franchisee) to use its brand name or business model for a fee conduct the business as an independent branch of the franchisor.
What is the role of the franchisor in a successful franchise?
Franchising is governed by an elaborate agreement specifying the responsibilities & duties of both the parties involved. The franchisor assists in setting up the service provider with adequate skill & knowledge to emanate its brand to the customers
What is licensing and how does it work?
Licensing: It is an agreement between two parties where one party (hereafter referred to as the licensor) sells another party (hereafter referred to as the licensee) the rights to use its intellectual property or manufacture the licensor’s products in exchange for a royalty.
What is the primary advantage of licensing?
What is the primary advantage of licensing? It helps a firm avoid the development costs associated with opening a foreign market.
Which of the following entry modes is a contractual agreement franchising strategic alliance exporting joint ventures?
The correct option is c. A joint venture is a special arrangement between two firms where the firms agree to bring together their resource and form a new department for the achievement of a specific target. A company can enter into a joint venture with a company from the country it is trying to enter.
Which of the following is a drawback of licensing?
A disadvantage of licensing is that it does not give a firm the tight control over manufacturing, marketing, and strategy that is required for realizing experience curve and location economies. Licensing typically involves each licensee setting up its own production operations.
Which of the following is true of modes of entry quizlet?
Which of the following is true of modes of entry? Equity modes are indicative of relatively larger, harder-to-reverse commitments.
What is the difference between franchising and licensing?
In a franchise partnership, the business belongs to the franchisee. The franchisee essentially runs the business for the franchisor, but at a fee. In a licensing partnership, the licensee only pays the licensor for a specific product, for which the licensor may have taken out patent rights.
Which of the following is not considered a specific disadvantage of licensing as a business strategy?
Which of the following is NOT a disadvantage of licensing? Little control over the marketing of the products.
What is an example of licensing?
Licensing agreements generate revenues, called royalties, earned by a company for allowing its copyrighted or patented material to be used by another company. Some examples of things that may be licensed include songs, sports team logos, intellectual property, software, and technology.
What is the importance of licensing?
Importance of Licensure. Professional licensure protects the public by enforcing standards that restrict practice to qualified individuals who have met specific qualifications in education, work experience, and exams.
What licensing means?
Licensing is defined as the granting of permission by the licenser to the licensee to use intellectual property rights, such as trademarks, patents, brand names, or technology, under defined conditions.
Which of the following is true of licensing as a mode of entry into foreign markets?
Which of the following is an advantage of licensing as a mode of entry into foreign markets? The licensor does not have to bear the development costs and risks associated with opening a foreign market.
Which of the following is one of the methods by which entrepreneurial firms internationalize by entering foreign markets quizlet?
Entrepreneurial firms can internationalize while staying in domestic markets through indirect exports. Indirect export is one of the strategies used by entrepreneurial SMEs to internationalize without leaving their home country.
Which of the following statements is true with respect to differences in knowledge management among the four strategies of MNEs?
Which of the following statements with respect to differences in knowledge management among the four types of MNEs is true? There is extensive flow of knowledge and people in multiple directions in a transnational strategy.
What is contractual entry mode?
Two common types of contractual entry strategies are licensing and franchising. Licensing is an arrangement by which the owner of intellectual property grants another firm the right to use that property for a specific time period in exchange for royalties or other compensation.
What is contractual modes entry into a foreign country?
Specialized Entry Modes: Contractual Exporting is a easy way to enter an international market. In addition to exporting, companies can choose to pursue more specialized modes of entry—namely, contracutal modes or investment modes. Contractual modes involve the use of contracts rather than investment.
What is franchising market entry strategy?
Franchising as a strategy enables a company to gain competitive advantage over its competitors. The competitiveness is achieved by nature of product, nature of the market, capacity of the franchisor, capacity of the franchisee and the rules and regulation of the host country.
What are the different modes of entry into international business?
There are several market entry methods that can be used.Exporting. Exporting is the direct sale of goods and / or services in another country. ... Licensing. Licensing allows another company in your target country to use your property. ... Franchising. ... Joint venture. ... Foreign direct investment. ... Wholly owned subsidiary. ... Piggybacking.
What is the difference between licensing and franchising?
Difference Between Licensing and Franchising. Licensing refers to an arrangement between licensor and licensee where latter party would acquire the right to use products and goods where the ownership remains with the licensor whereas Franchising refers to an arrangement between franchiser and franchisee where the latter will enjoy the ownership ...
What is Licensing?
To understand Licensing, let us take the example of Walt Disney. It is the registered owner of cartoon characters like Mickey Mouse, Donald Duck, etc., these characters are nothing but the outcome of an artist’s imagination which is now popular around the world. There are many merchandises which bear these characters on it; like bags, cups, bottles, etc.; now Walt Disney is not the sole manufacturer of this merchandise. Hence anyone apart from Walt Disney manufacturing these products enters into an agreement with the former to gain a right to use these characters on its merchandise for some consideration & sell the same. This kind of arrangement is referred to as licensing.
What is franchising agreement?
Franchising: It is an agreement between two parties where the , one party (henceforth referred as the franchisor), permits another party (henceforth referred as the franchisee) to use its brand name or business model for a fee in order to conduct the business as an independent branch of the franchisor. Licensing: It is an agreement between two ...
What is a license agreement?
Licensing: It is an agreement between two parties where the, one party (henceforth referred to as the Licensor), sells another party (henceforth referred to as the Licensee) the rights to use its intellectual property or manufacture the licensor’s products in exchange of royalty.
Who is governed by the licensor's terms of use?
The licensee is governed by the licensor’s terms of use as prescribed in the licensing agreement for the licensed product. Licensor, however, has no autonomy over the business of the licensor
Is franchising a subset of licensing?
Though both share similar advantages, licensing can be called a subset of franchising; i.e. a typical franchising arrangement would involve numerous licensing agreements to transfer the use of intellectual property rights. Franchising is a much broader concept since it involves a greater degree of control by the franchisor.
What is the case of licensing?
A) In the case of licensing, a firm has tight control over manufacturing, marketing, and strategy that is required for realizing economies of scale.
What does "d" mean in franchising?
D) Franchising eliminates any claim that the franchisor may seek in the future profits following the franchising agreement.
Why do manufacturers have greater control over distribution?
Manufacturers have greater control over distribution as they select agents and distributors located in foreign markets.
Why did Ego fail in Japan?
While the products sold by Ego were a major success in the West, they failed to elicit any positive consumer response in Japan. The marketing team realized that this failure was caused by the advertisements and hoardings used by Ego in which they displayed adolescents in clothes and postures that hurt Japanese values.
