Licensing and Franchising

Running head: LICENSING AND FRANCHISING
Licensing and franchising
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LICENSING AND FRANCHISING
Table of Contents
Introduction:...............................................................................................................................3
Discussion:.................................................................................................................................3
Explaining the essential features of licensing:...........................................................................3
Explaining the essential feature of franchising:.........................................................................3
Difference between licensing and franchising:..........................................................................3
Reasons for pursuing this route to generate shareholder value and revenue for organization:..3
Illustration of company wishing to expand its international business through licensing model:
....................................................................................................................................................3
Illustration of company wishing to expand its international business through franchising
model:.........................................................................................................................................3
Limitations of financing agreements:.........................................................................................3
Limitations of licensing agreements:.........................................................................................3
Mitigations of limiting the risks:................................................................................................3
Conclusion:................................................................................................................................3

LICENSING AND FRANCHISING
Introduction:
The report is prepared for explaining the concept of franchising and licensing and
how the model is used by organization to increase the value of shareholder and generating
revenue. The reasons of organization choosing the licensing or franchising model and
whether they use foreign direct investment through such model have been explained. The
limitations to the benefits and risks associated with each of the agreements have been
demonstrated in the report.
Discussion:
Explaining the essential features of licensing:
 Licensing is an arrangement under which one company has the permission of
manufacturing the products of products of other company in return of specified
amount of payment. It is the permission that is granted to any business for using
trademarks, patents, and technology and property rights (Burstein and Vogel 2017).
 The essence of licensing is that the ownership of property is retained by the owner
while granting the right to use it at the same time.
Explaining the essential feature of franchising:
 Franchising is an arrangement where franchisee has the right to produce and distribute
goods and services of franchisor. It is a business strategy that can be used to capture
the share of market. Hence, the franchisor retains the degree of control.
 Under franchise as a part of the agreement, the total business format tends to pass on
to the franchisee.