What is the difference between a franchise and a licence agreement?

In its simplest form, a licence is where a person (called the "Licensor") owns or has rights to something ("the Licensed Property") allows another person (called "the Licensee") to use it in return for some form of payment. The Licensor does not pass any ownership rights to the Licensee – the Licensee is merely getting the rights to use the Licensed Property. A Licence Agreement can be quite simple or very complex. If you buy a franchise, what you are buying is licence to use certain intellectual property which usually consists of the use of a system to conduct your business in certain way (as prescribed in a manual) and a right to use various trademarks and brand names. Where it differs from a Licence is in the obligations of the franchisee which are usually quite extensive and prescriptive.

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