Business Opportunity
Looking for a Franchise Opportunity or to start your own business???
South Pacific Health Enterprises will License all of its products under the right circumstances!
Not sure if Licensing is what you are looking for? Read this article written by an attorney, you can find the total article at:
http://townsend-law.netfirms.com/franchising.htm?gclid=CI-M1p_5gZkCFShRagodDXiGmg
· There are Many Ways to Skin a Cat. Though this article discusses “licensing versus franchising” as methods of expanding a business, it is important to note that these are just two paradigms that can be used. There are many other methods to use, and each factual situation will dictate the best possible expansion avenue to pursue. Maybe more than half of my clients pursue something other than licensing or franchising once they learn what is available…and usually at a 60-75% savings in costs in legal fees.
Why Consider “Licensing”?
· Licensing is Lower Cost and Can Be Done Quickly. If you are thinking about expanding your operation through franchising, licensing may be an alternative because (1) it is substantially less expensive, and (2) it takes about ten to fifteen business days to complete rather than months and months for franchises. Also, no past audited financial records showing successful performance are required in licensing.
· Business Goals Often Can Be Met. It is often possible to draft a license agreement that achieves the goals of the licensor and does not violate the various franchising laws.
· Existing Businesses as Potential Licensees. Existing businesses often buy a license and add the product or service to that existing business; this allows the licensee to keep his “bread winner” business going while he tests the licensing operations and thus reduces the risk on the acquiring the license.
· Much Less Work on Daily Basis. The day-to-day business operation of a licensor is customarily much less work and complex than the business of being a franchisor. If you become a franchisor, you generally have to give up the operations of your own business and enter the full time business of being a “franchisor”.
· Avoid Complex Government Regulation. There is little or no government regulation in licensing, and there is substantial and complex government regulation in franchising. But keep in mind, that no matter what expansion format you use, there is someone who may call it a “franchise”. You can have your five year old son and six year old daughter sell lemonade at two different stands outside your house, and there is someone who will allege that they are franchises. That is just a fact you have to live with in a world where there are too many attorneys with not enough to do.
· Licensing More Effective in Difficult Economic Times. In a time when America’s work force is being down sized, in many businesses the market for selling licenses is correspondingly expanding, because these displaced people need a way to replace their lost “living wages. Additionally, there are more qualified and desirable people available on the market to become licensees which makes business expansion quicker and more effective. In essence, the market for selling licenses in many businesses is actually expanding in difficult economic times. And when you add in the fact that licenses are often easier to get into because of a lower purchase price and quick set up, licensing is usually superior to franchising for the new licensee. Licensing is also superior to franchising for the Licensor because of the (a) quick set up, and (b) the substantially lower cost in legal fees.
A Quick Overview of Licensing
· Licensing is a business structure and method of expanding the distribution of goods and services. Rather than create a franchising business structure with the substantial costs involved, an entrepreneur who wishes to expand its business may be legally able to use a licensing legal structure. Usually a quick no-charge telephone conversation with experienced counsel can tell you if licensing will work in a particular situation. (Note: I do this several times a day.)
· As in franchising, in licensing there can be (i) an initial upfront fee, (ii) continuing royalties, (iii) monthly license fees during the term of the agreement, (iv) exclusive territories, and (v) long or short term agreements.
Difference between Franchising and Licensing
· Franchising and licensing as a means of expanding a business are often confused with one another. However, franchising and licensing come from two distinct areas of the law. Franchising is based on securities law and licensing is a form of contract law.
· What does this mean to the non-lawyer? It means that if one takes up franchising as a means of expanding a business, then compliance with the franchise laws, like the securities laws, requires registration of the franchise in the applicable jurisdictions. On the other hand, licensing is merely a contract between two independent contractors and franchise registration is not required.
· Here is the effect: It’s in the pocket book! Franchising creates more work for lawyers in complying with all the registration requirements, and consequently it is far more expensive to go the “franchising route” than down the licensing road which requires substantially less legal work.
· It is simple as that! If the factual situation is right for both formats, franchising is substantially more expensive than licensing!
If you are interested in licensing any of South Pacific Health’s Products, you can contact us!
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