Cons of Licensing
Loss of control: A license grants a licensee the authority to use all the mentioned prospects in the agreement based on their needs. This results in a lack of control over the intellectual and materialistic properties of the parent brand.
Additional risks: Even with the most trustworthy of companies, there is always the risk of defamation caused due to a damaged product or a mediocre service offered by a franchisee to the clients and customers. Thus, a franchiser must ensure that the quality of what they deliver is maintained and improved over time.
Interdependency: Licensors depend on licensees and how they operate the business to generate revenue. A licensee’s managerial skills and abilities play a huge part in the success of a licensor. Also, a licensor's lack of resources could result in business constraints.