When you’ve got a proven system for running a profitable company, it often makes sense to license that business system to others.
One of the most popular methods of doing this is to license geographically to third parties who won’t directly compete with you. Depending upon the size of your customer market, that can mean a different city, county, state/province, or even another country.
From a financial standpoint, this can be structured a variety of ways. For example, it could be a single flat fee up front, an annual license fee, a percentage of the licensee’s revenues, or a hybrid combination.
It’s important to note that licensing your business system the same thing as franchising. Chances are your licensee with be operating under a different business name and have a lot more flexibility on how to run a similar business.
With franchising, on the other hand, the franchisee is using the same business name and you as the franchisor have a lot of control over how the franchisee runs the business. And there are alot more laws and regulations you have to comply with when franchising.
If you need legal help licensing your business system, set up a phone consultation with Business Attorney Mike Young.