Business format franchising is the granting of a license by one person (the franchisor) to another (the franchisee). This entitles the franchisee to trade under the trade name of the franchisor and to make use of an entire business format package. This package comprises all the elements necessary to establish a previously untrained person in the business, and enables them to run it with ongoing assistance on a predetermined basis. Such a package is likely to include, amongst other things; training, business guidance in the form of a written manual, a franchise contract, agreed and protected market territory and efficient supply of all goods required from components to promotional materials. Such a business format package should optimise all available IP to maintain and protect the brand image and reputation.
Brand Protect is a niche firm offering advice and assistance on all aspects of IP, including that which concerns franchising. With our breadth of knowledge we are able to advise you, not only on the creation of the IP but also on how to retain it. We regularly fight for the rights of franchisors in the High Court. The work that we have undertaken, within the franchising sector, includes:
Protecting franchisors from franchisees who try to leave the network and attempt to take the franchisor’s clients with them. In these cases, we have been able to obtain immediate interim injunctions against them together with damages and costs.
Prosecuting a franchisee who purchased the required goods from a counterfeit supplier and not the franchisor. Such actions can damage the service offer and the customer’s experience. This, obviously, diminishes the brand value of the franchise and should be addressed speedily (before the franchisor’s reputation is damaged further).
Protecting the franchisor from competitors who use advertisements to unfairly “ride on the coat tails” of the franchisor. Such advertising may tarnish the brand of the franchisor. Again this cannot be tolerated and needs to be dealt with quickly, effectively and as cost effectively as possible.
The examples above can only give a flavour of the varied work that can be undertaken by Brand Protect on your behalf.
How can the franchisor protect the business (and reduce future legal costs)?
An essential feature of franchising success is retaining the reputation that a franchisor has established through the business’s corporate identity; be it a brand name, trade mark, service mark, design right, business equipment and components, copyright or company name. Often, more than one type of IP may apply to the same creation and, in order to protect a business concept, a “multi- layered” approach to IP rights should be considered. Brand Protect can advise on the best value approach to this protection, which is summarised briefly below.
Copyright protects material, such as literature, art, music, sound recordings, films and broadcasts. These rights are all unregistered and come into existence as soon as the “work” is created. The starting point for the franchisor is to record a description of the business model that they have developed. Additionally new documentation for all legal agreements should be produced (employment contracts, terms and conditions of sale, etc). The fact that the franchisor has created new documentation, and can prove the date of its creation, will be of great assistance if action against a competitor who has infringed the franchisor’s copyright is required (e.g. franchise operations manuals or training material).
- Design rights
Design rights protect the visual appearance or appeal of products. They can be registered or unregistered. The layout of a shop, packaging colours and the logo chosen for the business can all be subject to registered design rights. Such rights can be protected throughout the European Union for up to 25 years. Registering design rights is also an appropriate way to protect websites from copy-cat competitors.
Patents protect the technical and functional aspects of products and processes. All patents must be registered in each country where the protection is required and need to be renewed annually. If a franchise business is dependent on a computer program or any other type of equipment or machinery, that technology may be patentable. Patents can be obtained for any invention and can provide a monopoly over that invention for up to 20 years.
- Trade marks
Trade Marks protect signs that distinguish the goods and services of one trader from those of another. Unlike other forms of IP, trade marks can last for centuries. The oldest one – ‘Bass’ – was registered in 1876, and is still valid and enforceable today. Registered trade marks are the most prevalent form of registered IP and, when managed and carefully protected, can become the most valuable asset of any business. To achieve this, it is not only vital that the brand name is registered, but that all trade marks used by the franchise are also registered. The trade marks used by the franchisor are likely to be the most important aspect of the portfolio of intellectual property to be licensed. This includes not only the historic brand, but also all the names being used currently in the franchise business format and market place.
All these matters can be complex. At Brand Protect, we won’t complicate things further or charge you the earth for our services.