Difference Between a License and a Franchise in Georgia

You can monetize assets by licensing or franchising them. Knowing the difference between a license and a franchise in Georgia and structuring the deal correctly in view of that difference are crucial steps toward avoiding severe adverse legal and financial problems.

For more than a decade, our attorneys at Franchise.Law have worked with franchisors and business owners throughout the U.S. to set up franchising and licensing operations. We manage our multi-jurisdictional practice from our offices in Charlotte, North Carolina, where we maintain our law licenses. We provide services based on federal and multi-state franchise compliance to clients throughout the country.

What Does a License Focus On?

If you own an intellectual property asset such as a patent, trademark, or copyright, you can grant a third party a license to use that asset subject to specific conditions spelled out in a license agreement. Although they generally include similar license rights, franchises are different in that they include comprehensive business structures with detailed operating manuals and restrictions on how a Georgia business can be managed.

The terms and conditions you might see in a license agreement include:

• Territorial limitations
• Mechanisms to resolve disputes
• The duration of the licensed rights
• Whether the license is exclusive or non-exclusive
• Termination procedures and the parties’ rights after termination
• How and when royalties are calculated and paid for use of the licensed asset
• The parties’ respective commitments to protect intellectual property assets from unauthorized use

Given the complexity of a licensing arrangement, generic form license agreements rarely, if ever, address all crucial issues or provide proper protection to both parties. Asset owners will always be in a better legal and financial position when they work with an experienced licensing lawyer who knows how to prepare a license contract as unique as the assets that are the subject of the agreement.

A Franchise Offers Rights to a Complete Business Model

If you intend to franchise your business, per the rules and regulations that are enforced by the U.S Federal Trade Commission (FTC), you will need to give a detailed Franchise Disclosure Document (FDD) to any prospective franchisees at least 14 days before they execute any documents or pay you any fees. The FTC’s oversight is a key difference distinguishing franchises and licenses in Georgia.

At a minimum, the FDD should address:

• How and when the franchise may be sold or terminated
• The legal names and identities of the franchisor and franchisee
• In-depth disclosures of the franchisor’s financial history and status
• All fees and costs, including the franchise buy-in fee, and periodic payments and minimums
• The franchisee’s obligations to participate in and pay for advertising and marketing campaigns
• The geographical region in which the franchisee may operate and use the franchisor’s business model and intellectual property assets

To satisfy FTC requirements, the FDD will also include a copy of the franchise agreement and all disclosures that the franchisee needs to make an intelligent and informed decision. You should not attempt to franchise your business without assistance from a knowledgeable attorney who could verify that your disclosures satisfy the FTC’s strict guidelines.

Contact Us To Learn How Licenses and Franchises in Georgia Differ

Our attorneys at Franchise.Law could give you a more thorough explanation of the difference between a license and a franchise in Georgia. Please call our offices to schedule a meeting with our team to explore how to better monetize your assets and to assess the expansion of your business through licensing or franchising.