What's franchising and licensing?

as part of my job i need to know about franchising and licensing.. in order to play the advisory role to my clients.. well, it's also good knowledge if i ever wanna run my own business..

what's franchising?
Today any business wanted to be called a franchise must comprises these 3 key elements:
(i) business/operation system (manual, guide, procedures,..),
(ii) brand (trademark, copyright, design,..),
(iii) royalty fee (upfront, annual, % of revenue,..)
otherwise also known as business format franchising.
example: MacDonald

what's licensing?
same as franchising except minus the business/operating system.
in the past (early days), it was known as product distribution franchising.
example: Coca-Cola bottling licensing

what's the difference between franchising and licensing?
as mentioned above, franchising includes imparting entire business model to the franchisee.
In addition, franchiser takes a more proactive role than licensing which is more passive. Being proactive means that the franchiser will be working much closely with the franchisee to ensure his success and making sure he is operating according to the operating manual. Licensor usually leaves the licensee alone as long as it doesnt breach any contract agreement.

What are the key items in a franchise?
There are 23 key items in a franchise that needs to be addressed or mentioned - with reference to the UFOC (Uniform Franchise Offering Circular).
1. Franchisor
2. Business experience
3. Litigation history
4. Bankruptcy
5. Initial franchise fee
6. Other fees
7. Initial investment
8. Business restrictions
9. Franchisee's obligations
10. Financing
11. Franchisor's obligations
12. Territory
13. Trademarks
14. Patents, copyrights & proprietary information
15. Participation
16. Product or service restrictions
17. Renewal, termination, transfers & dispute resolution
18. Celebrities
19. Earnings claims
20. Other units in the system
21. Financial statements
22. Agreements
23. Confirmation


visit http://www.flasingapore.org/ for more info..