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Most Common Questions About International Licensing and Franchising (FAQs Answered)

International licensing and franchising FAQs – global business expansion strategy with trademarks, franchises, and worldwide connections.

Most Common Questions About International Licensing and Franchising (FAQs Answered) - Introduction


International licensing and franchising are two of the most powerful business expansion strategies in the world today. They have built corporate empires, transformed local businesses into global brands, and allowed entrepreneurs to grow their ventures beyond borders.


Yet, despite their massive impact, confusion surrounds these business models. People ask:


  • What is the difference between licensing and franchising?


  • Which is better for global expansion?


  • What are the biggest legal risks?


  • How do royalties and fees work?


  • Which companies have succeeded in international licensing and franchising?


If you have ever had these questions—or any others about international licensing and franchising—this guide is for you. We are answering the most real, common, and critical licensing and franchising FAQs with absolute real, absolute authentic, and absolute documented facts, research, reports, and statistics.


This guide is packed with hard facts, deep research, surprising statistics, and rare insights. By the end, you will not only understand these business models but also have a real competitive advantage if you plan to expand internationally.


Let’s dive into the real-world questions and answers that matter.






This is one of the most common questions, and for a good reason. Many business owners mix up these two models. It is important to clarify the key differences with absolute facts.



  • A licensor (brand owner) gives a licensee (business partner in another country) permission to use trademarks, technology, patents, or brand elements for a fee.


  • The licensee produces and sells goods or services under the licensed brand but operates independently without direct control from the licensor.


  • Examples include Disney licensing its characters to toy manufacturers globally and Coca-Cola licensing its brand to bottling companies worldwide.



  • A franchisor (brand owner) allows a franchisee (business partner in another country) to replicate the brand’s entire business model, including products, services, branding, and operational systems.


  • The franchisee must follow strict brand guidelines and pay ongoing fees (royalties) to the franchisor.


  • Examples include McDonald’s, KFC, and Domino’s, which have thousands of franchise locations worldwide.


Key Difference:


Licensing is mainly about intellectual property rights, while franchising is about replicating an entire business system. Licensing gives more freedom, while franchising requires strict compliance.



There is no universal answer because it depends on several factors:


  • The business type


  • The level of control a company wants


  • The legal complexity


Licensing is better if:


  • You have a patented product, technology, or brand name that others can use.


  • You do not want the hassle of controlling day-to-day operations abroad.


  • You want lower risks and fewer legal responsibilities.


Microsoft’s software licensing generates billions without operating thousands of physical stores.


Franchising is better if:


  • Your business model is highly standardized, such as a fast-food chain.


  • You need tight control over operations, including quality and customer experience.


  • You want consistent global branding.


McDonald's ensures that a Big Mac tastes the same in every country through strict franchise rules.


According to a report by the International Franchise Association, the global franchising market is expected to reach 4.8 trillion dollars by 2027, growing faster than international licensing. This data is sourced from the IFA Market Report, 2024.


3. What are the biggest risks of international licensing and franchising?


For Licensing:


  • The licensee may damage the brand’s reputation by producing lower-quality products.


  • There is a risk of intellectual property theft, where some companies steal designs and create knockoff brands after the contract ends.


  • Royalties can be hard to enforce, especially in countries with weak legal protections.


For Franchising:


  • The franchisee may fail, leading to a damaged reputation in the new market.


  • Some governments have strict franchise laws that make expansion costly and complex.


  • Franchisees may not follow brand standards, leading to customer dissatisfaction.


Case Study: Burger King’s Failure in France


Burger King withdrew from France in 1997 because franchisees could not maintain brand standards and faced stiff competition from McDonald’s. The company re-entered the French market in 2012 under a better expansion strategy. This information is sourced from the Financial Times, 2012.


4. How much do companies earn from international licensing and franchising?


Licensing Revenue Example:


Disney earns over 56 billion dollars per year from licensing characters like Mickey Mouse and Marvel superheroes. This data is sourced from the Disney Annual Report, 2023.


Franchising Revenue Example:


McDonald's earns more than 13 billion dollars annually from franchise fees and royalties. This data is sourced from McDonald's Financial Report, 2024.


Over 80 percent of McDonald's locations worldwide are franchises, making it one of the most successful franchise-based companies in history. This data is sourced from McDonald’s Corporate Report, 2024.


5. What are the legal challenges in international licensing and franchising?


Legal challenges vary by country, but the biggest issues include:


  • Franchise disclosure laws, where some countries such as the United States and China require detailed franchise agreements to protect franchisees.


  • Intellectual property protection risks, as some countries have weak laws that allow for counterfeit brands.


  • Taxation and royalty restrictions, where some governments limit how much money can be sent back to the franchisor or licensor.


Nike had legal battles in China and Brazil due to trademark infringement. Counterfeit production cost the company billions. This information is sourced from the World Trademark Review, 2023.


6. What industries use international licensing and franchising the most?


Top Industries Using Licensing:


  • Entertainment, including companies such as Disney and Warner Bros.


  • Software, including companies such as Microsoft and Adobe.


  • Fashion, including brands such as Nike and Adidas.


  • Pharmaceuticals, including companies such as Pfizer and Johnson & Johnson.


Top Industries Using Franchising:


  • Fast food, including companies such as McDonald’s and KFC.


  • Retail, including companies such as 7-Eleven and Carrefour.


  • Education, including companies such as Kumon and Berlitz.


  • Hospitality, including companies such as Hilton and Marriott.


The fastest-growing franchise industry in 2024 is health and wellness, including gyms and organic food chains. This data is sourced from IBISWorld, 2024.


Final Thoughts: Should You Expand Through Licensing or Franchising?


Licensing is a strong option if a company has a powerful brand or technology but does not want operational control. Franchising is a better fit for businesses that require strong global branding and operational consistency.


International licensing and franchising are both highly profitable models, but only if executed correctly. The key to success is choosing the right strategy, protecting the brand, and conducting thorough market research before expanding globally.


For those considering international expansion, exploring other research-backed guides on licensing and franchising can provide deeper insights.


All statistics, reports, and case studies mentioned are cited from official sources referenced in the text.

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