Definition

Franchising is “a contractual relationship where one party (franchisor) allows another (franchisee) to use its brand, system, and know-how for a fee.”
Licensing is “granting permission to use intellectual property (brand, logo, formula) for royalties.”

Introduction

Franchising and licensing help brands scale without owning every outlet — they trade ownership for influence.

Explanation

Franchising: tight operational control (McDonald’s).

Licensing: flexible brand use (Disney character merchandise).

Benefits: quick expansion, local entrepreneurship, brand consistency.

Key Takeaways

Franchising ensures uniformity; licensing gives flexibility.

Ideal for global expansion with limited capital.

Success depends on quality control and brand integrity.

Real-World Case

McDonald’s uses franchising to scale globally with consistent experience and training.
Reference: https://www.mcdonalds.com