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Franchisees rent the brand for a fee too

"licensees are “renting” the brand for a fee."

It's not just licensees. I've heard a number of franchisor attorneys also argue that franchise licensees are also "renting" the brand for a fee.

Craig Hsueh's picture

Starbucks: A zee by any other name is stil a zee

A lot of sources like to erroneously state that Starbucks is not a franchisor. News journals often pick up on this misinformation from brokers. What they really mean is that the franchised licensees of Starbucks, such as HMSHost or Marriott, are really big companies that would never reach out to brokers who sell to small mom & pops buying a franchise. Ergo, those brokers or mom & pop attorneys do not consider Starbucks a franchisor since they are not in their sphere of business.

The confusion is exacerbated in that this relationship is sometimes misunderstood in the media as a license instead of a franchise license. For example, here:

"licensing provides Starbucks with more control of the brand because the licensee does not own the store, as a franchisee would; rather, licensees are “renting” the brand for a fee."

That's just pure nonsense. There are many franchisees that do not own the store -- like McDonald's franchisees, 7-Eleven or the vast number of franchisees. And a Starbuck's fractional franchised location inside an Albertson's supermarket is paid for and owned by whom? Starbucks? I don't think so.

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