The Difference Between Franchise and Partnership, Explained

A group of people wearing business casual suits looking at a laptop screen

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Franchise and partnership are familiar terms in the business world, but how are they different from one another?


Franchising is a business whereby the owner licenses its branding, product, and operations in return for a franchise fee.

Reminder: if you want to franchise your business, then you need to obtain a franchise registration certificate, or Surat Tanda Pendaftaran Waralaba (STPW). On top of that, you must also provide a clear business proposition after having registered Intellectual Property Rights and need to abide by the franchise license rules.


A group of people, smartly-dressed, sitting around a wooden table, discussing about business

Source: Faxuels/ 

A partnership involves two or more people operating a business and sharing its profits. A contractual agreement is optional but often useful to set the terms and conditions. These include the distribution of ownership, responsibilities, and profits and losses.

Perhaps the most desirable advantage that a partnership offers is the exclusion of franchise, royalty, or distribution fee(s) which are common features of a franchise.

Simply put, franchises and partnerships share the same objective of making profits although some features may differ. For example, a franchise is owned by an individual with a licensing agreement from a franchisor, whereas a partnership involves two or more people operating and managing a business.

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