{"id":799,"date":"2014-06-09T15:03:02","date_gmt":"2014-06-09T15:03:02","guid":{"rendered":"http:\/\/thefranchisemaker.com\/learningcenter\/?p=799"},"modified":"2026-05-15T00:05:29","modified_gmt":"2026-05-15T00:05:29","slug":"should-i-franchise-or-license-my-business","status":"publish","type":"post","link":"https:\/\/www.thefranchisemaker.com\/learningcenter\/should-i-franchise-or-license-my-business\/","title":{"rendered":"Should I Franchise or License My Business"},"content":{"rendered":"<p style=\"text-align: justify;\"><span style=\"color: #000000;\">When you are ready to expand your business, you may start exploring both licensing and franchising as possible growth strategies. However it does not take long before things start getting confusing. <\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #000000;\">\u201cShould I franchise my business or license my business?\u201d <\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #000000;\">We hear this question often and it is important that you understand the differences before moving forward.<\/span><\/p>\n<p><span style=\"color: #000000;\">At <a href=\"https:\/\/www.thefranchisemaker.com\/\">The Franchise Maker<\/a>, we have helped business owners understand the differences between franchising and licensing for decades across a wide range of industries. The right direction for you depends largely on your long-term goals, how much control you want to maintain and how involved you want to remain moving forward.<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #000000;\">Quick Answer: What is the Difference Between Licensing and Franchising?<\/span><\/h2>\n<p><span style=\"color: #000000;\">In simple terms, licensing usually means you are allowing someone to use your name, concept or intellectual property with very little ongoing involvement from you.<\/span><\/p>\n<p><span style=\"color: #000000;\">Franchising, on the other hand, generally means:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">you want operators to follow your systems<\/span><\/li>\n<li><span style=\"color: #000000;\">using your name (brand) consistently<\/span><\/li>\n<li><span style=\"color: #000000;\">doing things a certain way (operations)<\/span><\/li>\n<li><span style=\"color: #000000;\">and receiving ongoing coaching, mentorship and support from you\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\"><strong>Licensing generally involves:<\/strong><\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">NO operational control<\/span><\/li>\n<li><span style=\"color: #000000;\">NO ongoing support<\/span><\/li>\n<li><span style=\"color: #000000;\">a one-time fee\u00a0<\/span><\/li>\n<li><span style=\"color: #000000;\">operators largely run independently<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\"><strong>Franchising generally involves:<\/strong><\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">operational and marketing support<\/span><\/li>\n<li><span style=\"color: #000000;\">brand consistency<\/span><\/li>\n<li><span style=\"color: #000000;\">training and processes<\/span><\/li>\n<li><span style=\"color: #000000;\">ongoing royalties<\/span><\/li>\n<li><span style=\"color: #000000;\">a level of control over how the business operates<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">Just because your business can franchise does not necessarily mean it is fully franchise-ready. Likewise, many business owners mistakenly believe they are licensing when legally they are actually operating a franchise relationship.<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #000000;\">Teach Them and Turn Them Loose: Licensing<br \/>\n<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #000000;\">First and foremost you want to think about how you see other people operating your business moving forward.<\/span><\/p>\n<p><span style=\"color: #000000;\">Let&#8217;s say:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">you do NOT care what operators call their business\u00a0<\/span><\/li>\n<li><span style=\"color: #000000;\">you do NOT care how they run it<\/span><\/li>\n<li><span style=\"color: #000000;\">and you do NOT plan on collecting any ongoing royalties or providing ongoing support<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">In this scenario, licensing is your best bet.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #000000;\">In a licensing scenario, you could simply give someone permission to use your name, concept or intellectual property in exchange for a fee. Beyond that, however, they are generally on their own.<\/span><\/p>\n<p><span style=\"color: #000000;\">Bottom line:<\/span><\/p>\n<p><span style=\"color: #000000;\">If your goal is simply to train someone to do your business and then you &#8220;turn them loose&#8221; without any ongoing support or operational control (in other words training your future competition), licensing is your path.\u00a0<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #000000;\">Level of Control: Franchising<br \/>\n<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #000000;\">Now let&#8217;s look at franchising.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #000000;\">Suppose you want:<\/span><\/p>\n<ul>\n<li style=\"text-align: justify;\"><span style=\"color: #000000;\">everyone operating under the same name<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"color: #000000;\">consistency in how your products or services are delivered<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"color: #000000;\">operators to use specific vendors and suppliers<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"color: #000000;\">the operational standards, processes and procedures you developed followed<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">If everyone is operating your business under the same name and everyone MUST operate their business in a certain way, you are now exercising a level of control (read more about <a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/is-franchising-for-control-freaks\/\">Is Franchising for Control Freaks<\/a>)!\u00a0 <\/span><\/p>\n<p><span style=\"color: #000000;\">For example, if you require operators to:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\"> use specific vendors or suppliers<\/span><\/li>\n<li><span style=\"color: #000000;\">use, offer or sell specific products and services<\/span><\/li>\n<li><span style=\"color: #000000;\">perform services a certain way <\/span><\/li>\n<li><span style=\"color: #000000;\">follow specific processes or procedures<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">then that is considered operational control.<\/span><\/p>\n<p><span style=\"color: #000000;\">If\u00a0 you also:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">collect an upfront fee<\/span><\/li>\n<li><span style=\"color: #000000;\">collect ongoing royalties exceeding $500 per year<\/span><\/li>\n<li><span style=\"color: #000000;\">and provide operational and marketing support<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">then by definition this is a franchise relationship\u00a0(learn how <a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/franchising-it-is-not-a-parentchild-relationship\/\">Franchising is Not a Parent Child Relationship<\/a>).<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #000000;\">What Typically Defines a Franchise Relationship?<\/span><\/h2>\n<p><span style=\"color: #000000;\">A franchise relationship generally includes three primary components:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">Required use of your name<\/span><\/li>\n<li><span style=\"color: #000000;\">Operational and\/or marketing support<\/span><\/li>\n<li><span style=\"color: #000000;\">Collection of upfront frees and ongoing royalties<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">Marketing support (and this is the tricky one) can be as simple as:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">listing locations on your website<\/span><\/li>\n<li><span style=\"color: #000000;\">providing advertising materials<\/span><\/li>\n<li><span style=\"color: #000000;\">helping operators market their business<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">Many business accidentally cross the line into franchising because they are exercising too much control while believing they are \u201cjust licensing.\u201d And unfortunately this can lead fines and fees from the different states and lawsuits.\u00a0<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #000000;\">Why Licensing Can Get Business Owners Into Trouble<\/span><\/h2>\n<p class=\"isSelectedEnd\"><span style=\"color: #000000;\">One of the biggest misconceptions surrounding business expansion is the belief that licensing is automatically easier, safer or less regulated than franchising.<\/span><\/p>\n<p class=\"isSelectedEnd\"><span style=\"color: #000000;\">That is not always true.<\/span><\/p>\n<p class=\"isSelectedEnd\"><span style=\"color: #000000;\">If you exercise operational control while collecting fees and providing support (operational support or marketing support), governmental agencies may determine that your arrangement legally qualifies as a franchise relationship regardless of what you call it.<\/span><\/p>\n<p><span style=\"color: #000000;\">We have seen businesses attempt to license and ultimately face:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">government scrutiny<\/span><\/li>\n<li><span style=\"color: #000000;\">fines<\/span><\/li>\n<li><span style=\"color: #000000;\">litigation<\/span><\/li>\n<li><span style=\"color: #000000;\">and in some cases bankruptcy<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">because the arrangement they created was legally considered a franchise (read a horror story about <a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/horror-story-licensing-gone-wrong\/\">Licensing Gone Wrong<\/a>).<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #000000;\">What Most Business Owners Forget to Ask Before Choosing Between Licensing and Franchising<\/span><\/h2>\n<p><span style=\"color: #000000;\">Many business owners focus heavily on:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">expansion speed<\/span><\/li>\n<li><span style=\"color: #000000;\">startup costs<\/span><\/li>\n<li><span style=\"color: #000000;\">legal expenses<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">while overlooking the long-term implications of branding, consistency and what works best given their end game (learn more about &#8220;<a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/whats-your-end-game-franchising-may-play-a-role\/\">What&#8217;s Your End Game Franchising May Play a Role<\/a>&#8220;)<\/span><\/p>\n<h3 style=\"text-align: justify;\"><span style=\"color: #000000;\">Questions You Should Ask Yourself<\/span><\/h3>\n<ul>\n<li><span style=\"color: #000000;\">Do you want operators using your same name?<\/span><\/li>\n<li><span style=\"color: #000000;\">Do you want consistency across all locations?<\/span><\/li>\n<li><span style=\"color: #000000;\">Do you plan on providing ongoing operational guidance?<\/span><\/li>\n<li><span style=\"color: #000000;\">Do you want recurring royalties?<\/span><\/li>\n<li><span style=\"color: #000000;\">Do you want to build a long-term brand?<\/span><\/li>\n<li><span style=\"color: #000000;\">Are you comfortable giving up some control?<\/span><\/li>\n<li><span style=\"color: #000000;\">Can your processes realistically be duplicated?<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">These are often the questions that ultimately determine whether licensing or franchising is the better fit for your business.<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #000000;\">What&#8217;s Right for You Depends on Your Goal<br \/>\n<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #000000;\">It is really about your end goal and in the long run what you want long-term. <\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #000000;\">If you goal is to simply:<\/span><\/p>\n<ul>\n<li style=\"text-align: justify;\"><span style=\"color: #000000;\">train operators<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"color: #000000;\">collect a one-time fee<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"color: #000000;\">and the operators run their business independently<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">then licensing is your path (although keep in mind you will be training your competition). <\/span><\/p>\n<p><span style=\"color: #000000;\">However, if instead, you goal is to:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">build a recognizable brand<\/span><\/li>\n<li><span style=\"color: #000000;\">create consistency<\/span><\/li>\n<li><span style=\"color: #000000;\">maintain operational standards<\/span><\/li>\n<li><span style=\"color: #000000;\">provide support<\/span><\/li>\n<li><span style=\"color: #000000;\">scale a network of like-minded operators<\/span><\/li>\n<li><span style=\"color: #000000;\">and create a chain of businesses (take a look at &#8220;<a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/launch-your-own-chain-business\/\">Want to Start a Chain Business<\/a>&#8220;)<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">then franchising is your path for a long-term growth strategy (take a look at the <\/span><span style=\"color: #000000;\"> <a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/benefits-of-franchising\/\">Benefits of Franchising<\/a>).<\/span><\/p>\n<p><span style=\"color: #000000;\">Before deciding between licensing and franchising, it is also important to evaluate whether your business is truly franchise-ready and capable of being replicated successfully by others. This is where we step into the picture.<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #000000;\">Final Thoughts About Licensing vs Franchising<\/span><\/h2>\n<p class=\"isSelectedEnd\"><span style=\"color: #000000;\">Licensing and franchising can appear very similar on the surface. However, the level of operational control, support and ongoing involvement dramatically changes how these relationships are viewed legally.<\/span><\/p>\n<p class=\"isSelectedEnd\"><span style=\"color: #000000;\">Many business owners unintentionally cross the line from licensing into franchising without realizing it.<\/span><\/p>\n<p><span style=\"color: #000000;\">That is why your franchise feasibility, operational structure and long-term goals should be evaluated carefully before deciding which direction is right for your business.<\/span><\/p>\n<p><span style=\"color: #000000;\">(Read more about &#8220;<a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/the-major-difference-between-franchising-and-licensing\/\">Major Differences Between Franchising and Licensing<\/a>&#8220;and this article &#8220;<a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/expanding-your-business-what-are-your-options\/\">Expanding Your Business, What are Your Options<\/a>&#8220;).\u00a0\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #000000;\">If you are not sure whether licensing or franchising is the right fit for your business call The Franchise Maker <\/span><span style=\"color: #000000;\">directly at <a href=\"tel:+18776155177\"><strong>1-877-615-5177<\/strong><\/a>. We will be more than happy to answer ALL of your questions, explain the differences and help you determine which path aligns with your long-term goals.<\/span><\/p>\n<p><a href=\"https:\/\/www.thefranchisemaker.com\/about-us\" target=\"_blank\" rel=\"noopener noreferrer\"><img decoding=\"async\" class=\"aligncenter wp-image-1972 size-full\" src=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/wp-content\/uploads\/2007\/12\/BBB-Torch-Award-Emblem-2.jpg\" alt=\"\" width=\"294\" height=\"85\" \/><\/a> <a class=\"button btn btn-sm tfm-button request-info-button\" role=\"button\" href=\"#\">Request Information<\/a><\/p>\n<ul>\n<li><a href=\"https:\/\/www.thefranchisemaker.com\/how-to-franchise\">Steps to Franchise Your Business<\/a><\/li>\n<li><a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/is-my-business-franchisable\/\">Is My Business Franchisable<\/a><\/li>\n<li><a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/how-to-make-money-franchising-your-business\/\">How Do I Make Money Franchising My Business<\/a><\/li>\n<li><a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/secrets-to-business-franchising\/\">Secrets to Business Franchising<\/a><\/li>\n<li><a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/what-is-the-biggest-risk-to-franchising-a-business\/\">Risks to Franchising a Business<\/a><\/li>\n<li><a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/franchise-development-services\/\">What Are Franchise Development Services<\/a><\/li>\n<li><a href=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/i-just-want-someone-to-make-a-franchise-for-me-no-scams\/\">Make Franchise for Me No Scams<\/a><\/li>\n<\/ul>\n<p style=\"text-align: center;\"><!-- x-tinymce\/html --><\/p>\n<p><a href=\"https:\/\/www.google.com\/search?q=the+franchise+maker\" target=\"_blank\" rel=\"nofollow noopener\"><img decoding=\"async\" class=\"aligncenter wp-image-1972 size-full\" src=\"https:\/\/www.thefranchisemaker.com\/learningcenter\/wp-content\/uploads\/2023\/08\/GoogleFiveStars.jpg\" alt=\"See Our Google Reviews\" width=\"200\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"When you are ready to expand your business, you may start exploring both licensing and franchising as possible growth strategies. However it does not take long before things start getting confusing. \u201cShould I franchise my business or license my business?\u201d We hear this question often and it is important that you understand the differences before&#8230; ","protected":false},"author":1,"featured_media":5138,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_page_generator_pro_exclude":false,"_page_generator_pro_group":0,"_page_generator_pro_index":0,"footnotes":""},"categories":[11],"tags":[],"class_list":["post-799","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-how-to-franchise","entry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Should I Franchise or License My Business<\/title>\n<meta name=\"description\" content=\"Are you wondering, &quot;Should I franchise or license my business&quot;? 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