Have you ever wondered whether licensing or franchising is the best model to grow your business? Many people wanting to avoid the cost and regulation of franchising will consider licensing as an alternative. But is licensing your business model really an alternative to franchising? What is licensing anyway and what is the difference between a franchise and a licence?
Firstly you cannot convert a franchise to a licence simply by changing the name at the top of the document. The label given to the arrangement has no influence over the legal effect of the arrangement. Franchising is just a form of licensing.
Whether the relationship that you wish to establish is really a franchise or a licence can be determined only in one way. The Franchising Code of Conduct defines certain arrangements as a franchise. The code provides that if certain ingredients are present then a franchise exists.
Dealing firstly with whether it is possible to franchise your business.
If your business:
then you are probably not ready to franchise.
Lots of people have great ideas but, do not have the time, the focus or the money, to implement or advance those ideas. In these times, which many business people see as, uncertain times, people are not prepared to take a risk, even if the potential reward is handsome.There are however ways of reducing the cost and risk associated with the development of an idea, project or business, while at the same time obtaining access to a bank of ideas, knowledge and resources, at no upfront cost. Yes, less cost and a better chance of success! It is possible!
Unless you have seen first hand, the way that legal proceedings can be built or destroyed, by a written note relating to a matter in issue, then you cannot appreciate how much lawyers and the court system love bits of paper. Written notes on bits of paper can literally determine the outcome of legal proceedings.
The absence of written notes can cause lawyers on both sides of an argument to work for days preparing affidavit material, each trying to recount, with limited success what was said. In many cases the factual debate is often won by the person with the best supporting paper.