"Can't I just license my brand instead?" is one of the more common questions a founder asks before committing to franchising. The answer in Australia is more nuanced than "yes" or "no" — because the Franchising Code of Conduct defines franchising functionally, not by what you call it.
The legal definition matters more than the label
Under the Code, a franchise exists when three conditions are met: (1) a written agreement grants the right to carry on a business (2) under a system or marketing plan substantially determined by the franchisor (3) with payment of a fee. Call the document a "licence agreement" all you like — if those three elements are present, it's a franchise, and every Code obligation applies.
Including: Disclosure Document, 14-day cooling-off, marketing fund accounting, cooling-off, mandatory dispute resolution, restrictions on transfer and renewal, ACCC enforcement.
True licensing is narrower
A licence — properly drawn — grants the use of specific assets (a trademark, a patent, a piece of software, a recipe) without prescribing how the licensee operates their broader business. The licensee runs their own business their way; they just happen to have the right to use your name on a product or two.
This works for: cosmetic brands licensing a label, IP holders licensing a technology, music publishers licensing rights. It doesn't work for an operating system — a cafe concept, a fitness studio model, a clinic protocol — where you'd want the licensee to actually run the business in a specific way.
Practical differences
Control
Franchising: you can require the franchisee to run the business to a defined operations manual.
Licensing: you can require them to use the IP correctly. That's about it.
Quality assurance
Franchising: audited, scheduled, contractual.
Licensing: usually a one-off approval at brand level.
Revenue model
Franchising: initial fee + ongoing royalty + marketing fund + supply.
Licensing: royalty on specific use of the IP, often product-based.
Regulatory weight
Franchising: full Code compliance — Disclosure Document, cooling-off, dispute resolution.
Licensing: general contract law and IP law. Lighter.
Brand consistency
Franchising: high — every venue runs the same playbook.
Licensing: variable — the licensee decides the customer experience.
How to decide
The honest test: do you want the operator to run the business your way, or just use your brand?
If you want operational consistency, you need franchising — and you need to comply with the Code. Pretending otherwise leads to litigation when something inevitably goes wrong.
If you only care about IP licensing — a product line, a trademark on a third-party shelf — licensing is faster, cheaper and lighter. But don't pretend you're getting franchising's control out of it.
The middle ground that doesn't exist
Founders sometimes try to draft an "operational licence" that gives them franchise-level control without Code obligations. The Code's functional test catches this. Drafting around it tends to produce a document that looks like a licence on paper but a franchise in court — the worst of both worlds.
If you'd like a partner-led conversation about which model fits, get in touch.