What’s the Difference Between a Franchise and a License?
So I was chatting with a friend over coffee the other day, and she asked,
“Wait, what’s the actual difference between a franchise and a license?”
And it kind of stopped me. Because it sounds like one of those questions we should know. But also… do we?
If you've ever wondered the same thing, you're in good company.
First: What’s a License?
A license is pretty chill.
Basically, someone gives you permission to use their intellectual property—a name, a logo, a product, a formula. That’s it.
They’re saying,
"Hey, you can use this thing we made, but you run your business however you want."
You can:
Sell a branded product
Use someone else’s creative work
Pay a licensing fee once or ongoing
But the key is: they don’t control how you operate your business. You’re on your own. Kind of like renting a car—you get to use it, but you drive wherever you want.
So What’s a Franchise Then?
A franchise is more hands-on.
You're not just borrowing a name—you’re stepping into an entire business system. Think McDonald's or The UPS Store.
You’re agreeing to follow their playbook.
They’ll say:
Here’s how you train your employees
Here’s how you market
Here’s what the store should look like
And yes, here’s what kind of napkins to use
It’s way more structured. And because of that structure—and the profit potential that comes with a proven system—it’s regulated by the Federal Trade Commission (FTC) in the U.S.
They want to make sure you know exactly what you’re signing up for.
A Quick Recap
License = permission
You get to use the thing, but they don’t tell you what to do.
Franchise = system
You get the brand, the operations, the support, and the rules.
And Why It Matters
If you’re dreaming of starting your own business, this is worth knowing.
A license might work if you want freedom and already have a business idea.
A franchise might be better if you want a ready-to-go system with support—and don’t mind following someone else’s rules.
Both are great, depending on who you are.
Back to That Coffee Shop Question
So, what’s the difference between a franchise and a license?
One gives you the freedom to use something.
The other gives you the structure to build something bigger.
It just depends on what kind of business journey you're looking for.
And honestly, it’s always good to ask the “basic” questions.
They usually lead to the best conversations.
*This is not an offer to sell a franchise. Franchise offerings are made only through the delivery of a Franchise Disclosure Document (FDD)*
