What is the difference between branding and licensing

It is, however, one that many companies and brands are not taking advantage of. The company that rents the brand is known as the licensee, while the one giving the brand is the licensor.

So what is a licensed brand? It is that brand that has been given to the licensee by the licensor. The licensor gets royalties while the licensee uses the name of the brand to market their product or service. The licensee benefits by reaching a wider audience because they are able to tap into the customers of the other brand.

The licensee will then produce, promote, and distribute the product or service and, in exchange, the licensor will get royalties from the sale. Once an agreement is in place, the licensee will be able to access all of the trademarks and logos that are associated with the brand.

Since it can take years and a significant amount of money to create a brand from scratch, licensing may be the best option. Brand licensing is also a shortcut route when a company is interested in gaining access to a positive brand.

Brand licensing can also be used to differentiate products from the competition and extend a brand. When a company licenses a brand, it will take on all of the marketing and production roles in bringing the new product or service to consumers. An example of a brand licensing agreement includes Reese's, who knew the large market for peanut-based chocolates, but instead of trying to create the products themselves, they licensed their brand to other manufacturers.

Despite there being greater freedom for licensees to run a licenced business in any way they think suitable, there are some standards to maintain:. Now you have all the information you need to figure out your path forward. Based on your own goals and objectives, both franchising and licensing offer distinct benefits.

They are both great ways to expand your business, but they differ greatly in terms of how much control you can have and how easy they are to manage. To read more about the pros and cons of franchising your business, click here. You know what they say about the best laid plans, right?

Even with all [ Making difficult decisions about the health and direction of your [ There are lots of advantages to running a franchise business. Whether [ How to Become a Domestic Cleaner. Receive up-to-date industry news, in-depth articles and the newest franchise opportunities directly to your inbox. Post a comment.

Check out our checklist Top 10 things you should know before you become a franchisee.