We have previously looked at the main difference between brand licensing and co-branding. Today, we will analyze the key difference between brand licensing and brand acquisition.
The main difference between brand licensing and brand acquisition lies in ownership and control over the brand.
Brand Licensing
In a brand licensing agreement, the brand owner (licensor) grants another company (licensee) the right to use its brand name, logo, or other Intellectual Property for specific purposes, such as producing a certain product or operating in a particular region. The licensor retains ownership of the brand, while the licensee usually pays a fee or royalties for the right to use the brand. The brand owner maintains control over the brand’s image and standards, while the licensee benefits from using an established brand to boost sales or market presence.
Brand licensing is typically temporary and defined by a contract.
Brand Acquisition
In brand acquisition, a company fully purchases another brand and takes complete ownership of it. This means the acquiring company has full control over the brand’s assets, Intellectual Property, and strategy. The new owner can make decisions about the brand’s direction, products, and operations without needing approval from the former owner.
Brand acquisition provides more control and long-term benefits, but it also involves a greater financial commitment and the responsibility of managing and sustaining the brand’s value.
In short, brand licensing is a temporary permission to use a brand and its associated intangible assets, while brand acquisition is the complete purchase and ownership of a brand. On one hand, brand acquisition compared to brand licensing provides greater ownership freedom for the buyer. On the other hand, it requires a significant initial investment for the acquisition.