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Licensing and franchising

You’ve worked really hard to create a great product or a fantastic service and now you’re interested in licensing and franchising your ideas and processes in order to make a bigger profit. This article should help you get started.

You will learn

  • What the difference between licensing and franchising is
  • What are the pros to developing your business in this way
  • Where you can go for more support

If you’re interested in becoming a franchise, you’re essentially allowing someone else to open a business and sell your products or services using your brand. For example, Subway are a franchise business, meaning that a business owner can open a subway sandwich shop and sell Subway sandwiches. This means that you can have another shop run by someone else so you don’t have to spread yourself to thin. You keep lots of control over the operations and processes of the new business, and take a percentage of the profits.

If you’re looking to license your business, you lose a bit of this control. You sell your brand, designs and processes to usually smaller businesses for them to use. Microsoft Office is a great example of licensing, you buy their programmes and use it for your own purposes. It can be really great for your business though, because you can significantly increase the number of people who use your product or service and make bigger profits.

Licensing and franchising are both forms of selling your intellectual property: your products, how they’re made, the service levels and training employees need to have, how your shops are decorated and set out to name just a few. You might not realise just how many assets you have in your business.

There are lots of reasons why you’d consider expanding your business through licensing or franchising:

Sharing risk

You’ll being making profits from the person you’ve sold your intellectual property to without having to deal with the financial risks of manufacturing, promoting and selling your product.

However, if you’re looking to develop new products or services, the person who’s using your franchise or license won’t need to worry about the risks associated with creating and marketing these. The risks are shared between you and your licensee or franchise owner.

Bigger profits and more customers

As the owner of your product or service, you’ll be focused on your target market to ensure you’re making a profit. If you branch out with a franchise or a license, you can increase the amount of profit you receive as your licensee or franchise owner can make profit from a market elsewhere. For example, if you run and own a bakery in Northallerton, someone else could open a bakery with your name and recipes in Selby to increase the number of people buying your products.

Reducing costs

Instead of selling your licenses, you could buy one from another business. Spending money to save money seems a little strange, but buying the right to use a more efficient production process will make your operations more cost effective and save you money in the long term.

Saving time

You could get your products or services to market faster by buying a license from another business. This means that by buying a production license from another business, you don’t have to spend the time and money developing your own when an effective method already exists. You don’t have to re-invent the wheel.

Become more competitive

If you can license or franchise your product or service, you can increase the number of customers who have access to them and increase your profits. You can then use the extra money to develop new ideas and beat your competition.

Further resources

The Intellectual Property Office is the best place for you to go when thinking about protecting your business. They have loads of great resources and lots of their advice is free.

You can attend their free events and workshops to learn all about your rights.

Their Youtube channel is full of really useful short videos which explain the basics.

You can access the IP health check tool completely free to see what you need to think about when protecting your business.


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Written by:

Beth Ellin

How's Business content writer

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