Case law shows that a court qualifies a franchise agreement when there is, among other things, a chain of the same concept of shop, b) for the purpose of increasing the visibility of the chain, c) the franchisee having the right and power to use the franchisee`s logo for the sale of goods or services. In addition, the franchisee (d) provides the franchisee with know-how, such as working methods and techniques. Therefore, if a franchise structure is chosen, these elements should be governed by the franchise agreement. 2. The franchisee is financially independent and therefore responsible for the necessary investments. So: less risk for franchisees; To find out if you have entered into a franchise agreement, you ask yourself the following questions: whether you opt for a franchise or a license depends largely on the control and degree of ongoing responsibilities that you are willing to transfer to your business. Even with this checklist, it`s not always clear if your business agreement is considered a franchise agreement. A common question is what does it mean to have a “substantial” system or marketing plan? There are benefits for both licensing and franchise models, and the strategy you choose depends on how your business operates and how much control you want to have over your expansion and business partners. In doing so, the franchisee ensures that the franchisees are not in competition. (a) a licence under which an undertaking, as licensor, grants to an undertaking other than the licensee the limited right to use a trade mark for limited purposes.
For example, Walt Disney, which licenses McDonald`s to match its McDonalds Happy Meals with a character protected by the Disney brand. If you purchase a franchise, you pay a fee for the right to operate a business, participate in a standard operating system, and use the franchise`s brand and proprietary information. The diversity of products and services offered by franchises makes the option attractive for many entrepreneurs or emerging business owners eager to grow and expand their business. McDonald`s is one of the best-known examples of a major franchise. From humble beginnings, McDonald`s now has more than 36,000 restaurants in more than 100 countries. When comparing franchising and licensing, the question often arises as to whether or not licensing is an alternative to franchising? The answer to this question is no, licensing is not an alternative to franchising. This is because franchise laws generally define a franchise as a relationship involving (a) the licensing of a trademark, (b) some degree of control over the activity (i.e. standards and specifications), and (c) the payment of a prior royalty.
So, if your goal is to expand your business, i.e. a relationship in which you have some control and participation over what your franchise/licensee partner offers and sells, then the relationship is most likely a franchise. . . .