Franchising is an advanced form of licensing. Franchising is normally about whole concepts which are regulated in detail in an agreement.
Intellectual property rights such as patents and trademarks can be used as a means for bringing about various forms of collaboration with other actors, such as franchising and licensing agreements.
In a franchising agreement, the basis is often a trademark and/or company name, but such agreements also often state that the franchisor has various forms of knowledge and logistics to which the franchisee gains access in return for the payment of remuneration to the party that owns the concept. The franchisee undertakes to run the business in a certain way, within the framework that is regulated by the relevant franchise agreement.
As an external party, it is often difficult to know how a franchise works, as the agreements often contain information which constitutes trade secrets or which is otherwise confidential. However, the most common basis is that the franchisor provides its trademark and certain services such as ranges, procurement, marketing and training. The fee that the franchisee pays is often linked to turnover.
As a franchisee, you will own your company, but the company will also be part of a wider context, e.g. a large business chain. Customers should perceive all franchise units to be a single company. As the business concept is tried and tested, the risk of failure will often be less if you set up a franchise business than if you start your own business from scratch. The biggest advantage for the franchisee is therefore that the business concept is well-known and works. Potential disadvantages ae that the franchisee is tied to the agreement with the franchisor, the annual fees and the fact that you cannot decide for yourself matters such as signage, prices and marketing. Advantages for the franchisor of leasing your business concept are that they do not have to establish every new store and that someone else shares the risk with them. By allowing franchisees to be separate entrepreneurs - with their own liability - there is also a good chance that the franchisee will put a lot of effort into making their own particular part of the chain successful. Well-known franchise chains include McDonald's, Pressbyrån, Seven Eleven, Polarn & Pyret and Hemglass.
Test your business
In the test, we will help you identify your intangible assets: