Franchising and intellectual property (IP) are intertwined. Typically someone purchasing a franchise hopes to join a system that has established a level of name recognition. That name recognition usually includes a trademark—a word, phrase, logo or other designation of the source of goods or services offered by the franchisee. Therefore, it is vital that franchisors consider the strength of their marks and take steps to protect them.
Moreover, in addition to usual business reasons for fostering the franchisor’s brand through trademark protection, some states require franchisor to have a registered trademark.
It is therefore important that every franchisor ensure that intellectual property is properly protected, such as through registration of any trademarks, trade dress, copyrights, and utility or design patents. Doing so can not only provide an edge against competitors, but it also provides franchisees the peace of mind of knowing that the franchise they are buying has a solid foundation to best grow its brand and products.
From the franchisee perspective, in addition to rights to use the system’s trademarks, the purchase of a franchise will typically include access to marketing materials, training manuals, and other items that fall within varying areas of intellectual property protection. For example, many manuals and brochures may be subject to copyright, a product’s appearance or packaging may be part of a franchise system’s trade dress, and certain systems, techniques or information may be considered a trade secret. Therefore, documents presented to a prospective franchisee will almost universally contain a provision that lays out the respective intellectual property rights of the franchisee and franchisor.
Because the importance of intellectual property both to franchisors and franchisees cannot be understated, it is vital that both parties consult with a knowledgeable professional to ensure all steps are taken to safeguard one of the system’s most important assets.