Compare Franchise and Licence Models for Scaling

Choosing how to expand your business is a major decision. Among the options available, franchising and licensing are two of the most common. Both allow you to grow by leveraging your brand and intellectual property without personally managing every new outlet. But which model is right for you?

What is franchising and how does it work?

Franchising involves creating a formal relationship with independent operators (franchisees) who run their own businesses using your brand and systems. As the franchisor, you provide the framework, standards and ongoing support to ensure consistency across the network.

The benefits of franchising include:

• Scalable brand growth  expansion without opening and managing each site yourself.
• Consistency  franchisees deliver services or products using proven systems.
• Support structure  training, onboarding and brand guidelines to help franchisees succeed.

However, franchising does require more ongoing oversight to maintain compliance and protect your brand.

At TMPlus | Tereza Murray Franchising, we develop market-ready franchise systems that package everything business owners need to launch confidently.

What is licensing and how does it work?

Licensing is a simpler model where you allow another party to use your intellectual property  such as a brand, product or software  in exchange for a fee or royalty. Unlike franchising, you don’t provide training, systems or operational support, and licensees typically operate with more independence.

Advantages of licensing include:

• Lower set-up costs - fewer documents and obligations compared to franchising.
• Flexibility - licensees can run their business in their own way.
• Speed to market - easier and quicker to roll out.

The trade-offs are less control over how your brand is used and fewer protections in the agreement, which can increase risk of inconsistency or misuse.

What are the key differences between franchising and licensing?

The two models may appear similar but differ in several important ways:

• Control and consistency franchising offers greater oversight of how your brand is delivered; licensing allows more independence but less consistency.
• Investment  franchising requires more upfront investment to create a structured system; licensing involves simpler agreements.
• Support  franchising includes training and ongoing guidance; licensing does not, making it more hands-off.

In short, franchising is about building a consistent network, while licensing is about extending your IP with less involvement.

How do I decide between franchising and licensing?

Your choice depends on your goals:

• Growth objectives  Are you aiming to build a national brand with consistency, or simply generate revenue from your IP?
• Your involvement  Do you want to actively support operators, or take a more passive approach?
• Your brand’s needs  Does your offering rely on a consistent customer experience, or can it adapt flexibly across markets?

For example, a service-based business often leans toward franchising to ensure delivery standards are met. A product-based business may favour licensing to allow wider distribution through existing operators.

Which model is best for sustainable growth?

Neither model is universally better. Franchising offers structured growth with consistency, while licensing provides flexibility and lower involvement. The right choice comes down to what aligns with your vision for the business over the next five to ten years.

At TMPlus, we work with business owners to evaluate these models objectively and develop strategies that align with their goals. Whether you choose franchising or licensing, the key is to ensure clarity, consistency and the right foundations for long-term growth.