Licensing

• Licensing grants a company or individual the right to use intellectual property such as trademarks, technology or patents within certain parameters. For example, a patent owner might grant a license to a company to use its research to manufacture a product.
  
  

Franchising

• Franchising involves forming a business by entering into a contractual arrangement with an already established firm and operating under the established firm's trade name in exchange for a fee or royalties. Franchises exist in many industries, such as restaurants, salons, gyms and other service-based businesses.
  
  

Considerations

• To determine which business type is the best alternative, certain things should be considered. For example, if a close working relationship with the parent company is desired, a franchising would be preferable, but the ability to infuse personal touches or creativity into the business is limited. If creativity and customization, or a more hands-off parent company relationship is desired, licensing would be a better alternative.