What is the difference between licensing and franchising? The former refers to purchasing a right to sell/use a particular product, while the latter concerns a whole business. If you wish to learn more about the intricacies of bubble tea franchising vs. licensing, read this article, as here we explain the difference between these two concepts in detail.

The Difference between Licensing & Franchising

The best way to understand how licensing and franchising differ is to break them down into smaller units/features. So, take a look at such a detailed comparison:

Business model

Franchising deals with providing certain services. It affects the whole business. The franchisee runs the whole business on behalf of the franchisor and needs to adhere to rules, regulations, and standards imposed by the franchisor.

Licensing, on the other hand, may apply even to just one product. It is based on royalties paid by the licensee to the licensor, and the rights towards the particular licensed goods are specified in the Terms of Use signed by the licensee. At no point should the license for a product affect the rest of the business.

Ownership

When it comes to ownership, you can see that licensing and franchising are two opposite sides of the same coin. In the former, the responsibility for the outcome is on the licensee – the licensor only sells the right to use their product. In the latter, the franchisee is supported by the franchisor, as both parties aim for the best business outcome.

Regulations

Licensing is regulated by standard law and restriction. Franchising, on the other hand, is regulated by company regulations along with laws of international business (if the parties are from two different countries) and state business.

Possibility of Franchising or Licensing a Boba Store

Most, if not the majority, of the branded boba stores use the franchise model instead of licensing for various reasons. One of these is that well-known bubble tea shops don’t just want to lend their names without being responsible for how the business turns out. The bubble tea business involves more intricacies, than for example, licensing an artwork. There are many things to consider, such as store construction, health sanitation, ingredient sourcing, etc. Therefore, it’s quite common to see boba brands operating as a franchise business model to ensure that the franchisee receives support from the franchisor and achieves the best results.

We prepared some pros and cons for starting a boba tea franchise for many entrepreneurs when trying to enter the world of bubble tea business – take a look below.

Franchising

Support from the franchisor
Higher chances of success
Well-established business model
Business scalability
Many elements are taken care of by the franchisor (eg. some parts of marketing)

A bit less control over the business
Might (but doesn’t have to) include higher initial costs

Set Your Bubble Tea Business on the Road to Success with ShareTea

At Sharetea we offer you the opportunity to open your bubble tea franchise with our full support. We believe that this is the best way to succeed. With us, you will have access to all our know-how, and you will attract customers from day one thanks to our well-established brand. So, do not wait – start your bubble tea franchise with us!

You may also read: Bubble Tea Franchise Cost: What You Need to Know?

Franchising vs. Licensing a Bubble Tea