subject: Benefits Of Licensing Over Franchising [print this page] If you are a successful and eager business owner looking to tap into the buying power of your existing customers, think about adding a new product line into your offering. Net Zero USA created the most logical way to go about this with an innovative Licensee model. There are tremendous benefits of licensing that outweigh the common challenges of a start-up franchise.
First, the key word to think about is "diversifying" your business if you have not already. As a business owner you may not want to give up all the successful hard work you have put into your business of blood, sweat and tears. Your customers are your livelihood and you would not choose to give them up. In a typical Franchise, a majority of the time there is very little wiggle room to offer multiple product lines. Most likely, you would have to represent the product line of the Franchisor exclusively and have to forfeit anything you might have created in the past. On the other hand, as a Licensee of Net Zero USA you will be able to add to your existing business by incorporating a new product into your business offering.
You may care to forget some of the things you had to learn the hard way in the past when starting up your first business. With the process of licensing, the start-up costs are much more minimal than a Franchise. The average Franchise start-up cost is in the $50,000 dollar range. By becoming a Licensee of Net Zero USA, all of the startup costs like designing your business model, creating marketing materials, and developing brand recognition are supported and have been taken care of like a fine tuned machine in the palm of your hands at a substantially lower cost.
When looking to expand your business, time can be the most valuable resource. Compared to a Franchise, a Licensee will typically require less time in three important areas: set up, training, and payback. Both the Licensing model and Franchising model provide the top experience existing in their respective industries. However, taking on a Franchise is typically a much larger job and caters to a more intense, prolonged process due to controlling headquarters.
In summary, being a Licensee would add to your business versus starting a business as a Franchise with higher costs up front and longer set up processes and commitments.
Benefits of a becoming a Licensee
1. Low Cost Setup Fees ( vs. Franchise)
2. Save up to $50K on designing, setup, procedures, advertising, HR etc.
3. Opportunity for immediate ROI versus avg. 6 mo+ ROI with a Franchise
4. No extensive lawyer fees and less paperwork vs. franchise. Typically, you would have to hire your own lawyer to start your own Franchise
5. Product has already been marketed as an established solution.
6. Ability to offer new product line(s) to existing customers.
7. Less Government regulations
8. Expansion is smooth with minimal margin for error thanks to backing of support office (Licensor).
9. All marketing collateral, operations manuals, training, and policies supplied.
Typical Franchise Challenges:
1. Loss of control with existing business
2. Continual annual fees, residuals, or royalties
3. Extensive restrictions
4. If operating at a loss, fees typically continue
5. Limited room for creativity and independence
6. Less decision making
7. Continual corporate oversight
8. Length of agreement averages 10 years. This makes it difficult to walk away in a down turning economy
