Intellectual property franchising and licensing are two crucial strategies for firms to safeguard and capitalize on their IP. Both of these acts are subject to Latvia’s Law on Intellectual Property. The act of allowing someone else to use one’s intellectual property (IP), such as a patent, trademark, or copyright, is known as intellectual property licensing. For permission to use the IP, the licensee frequently pays a fee to the licensor. In return for a fee, a franchisor will provide a franchisee the right to utilize its intellectual property, business strategy, and operational practices. The franchisor often receives a royalty from the franchisee on sales.
Understanding franchising and licensing
If you wish to expand your firm, it’s critical to comprehend what licensing and franchising represent. In essence, licensing is when you enable someone else to sell your items, whereas franchising is when you allow someone to replicate your firm in another place. You will be paid a fee in both licensing and franchising from the individual who replicates your company or sells your goods.
Why franchising and licensing
The main advantage of these two is that you may increase your market, and you may also be able to increase your income with these agreements. Franchising and licensing may be advantageous for both company owners and individuals looking to enter a lucrative sector. Licensing your product expands its appeal, allowing the licensee to market and sell the product without the burden of creating and producing it. You may not have been able to enter new markets without the aid of licensing and franchising.
Fundamentals of licensing
A license is a contract made between a licensor and a licensee. In return for a fee, the licensor, who is the owner of some intellectual property, grants the licensee access to utilize it. There are numerous ways to pay license fees:
- Lump sums.
- Perpetual royalties.
- A portion of any profits the licensee generates from exploiting the intellectual property.
Numerous options exist for businesses to gain from licensing:
- Increasing their share of the market.
- Shaping consumer preferences and cultivating brand loyalty for the company.
- Increasing exposure.
- Generating income.
A company is referred to be a licensee if it licenses the intellectual property of another company. A licensing agreement, a contractual document detailing the price and permitted uses of intellectual property, facilitates arrangements between a licensor and licensee.
Franchising
You might need to consider diversifying your organization if you are the owner of a fruitful brand name or business idea. On account of diversifying, you, the franchisor, give consent to an alternate individual, the franchisee, to lay out and work a part of your organization as a trade-off for a charge. The franchisee accepts your position to repeat your entire organization’s exercises in the wake of paying this charge. Commonly, the franchisee will pay you a one-time fixed charge before maybe keeping on paying you repeating costs like sovereignties. Franchisees could likewise be expected to pay the franchisor for promoting materials and supplies. Through diversification, a few of the most notable fast food chains on the planet have been created from neighborhood organizations to incredibly famous names. Establishments are accessible for pretty much every kind of organization. Franchises are available for almost every type of company. Franchises are often offered by well-established companies with a firm track record of success who also want to increase their market share. An entrepreneur who launches a franchise may get several advantages not possible when opening a new business:
- Customers recognize you right away.
- Already trained employees.
- Built-in marketing and advertising assistance.
Advantages of licensing and franchising
Both licensing and franchising provide alluring advantages to firms. For example, it is much simpler for you to enhance your company’s income when you have access to various revenue sources with absolutely no underlying expenses using these solutions. When you license or franchise your company, other people advertise it on your behalf, and you get paid for the privilege. This may minimize your marketing expenses and aid in expanding your company into previously untapped regions. If you want to enter international markets but are concerned about the risks and expenses of development, licensing may be extremely helpful. Licensing might be an excellent option if your company currently has a well-known brand and you want to increase your market share without building any additional sites. You may expand your consumer base without incurring the cost of building a new distribution system or opening a new location by licensing your items. Growing your company’s brand at a low cost is possible via licensing. Another significant advantage of licensing is that it increases consumer awareness of your brand. As brand recognition rises, so does its value, and your company’s ability to make more money as a result.
You can also find these articles helpful
Required licenses for financial and insurance activities business in Latvia
Company car taxes in Latvia
Taxation in free ports and Special Economic Zones in Latvia
