Licensing vs. Franchising

Licensing and franchising are both methods of expanding a brand by allowing others to use intellectual property, but they differ significantly. In a licensing model, the licensee typically pays for the right to use a brand name or technology without receiving a full operational system. Franchising, on the other hand, involves a more comprehensive relationship that includes branding, training, support, and operational controls. Franchising is regulated by the FTC and requires disclosure through the Franchise Disclosure Document (FDD), while licensing typically does not. Understanding the differences helps business owners choose the right model for growth or investment.