Protecting Your IP as a Franchisor
As you build your franchise system and brand, protecting your intellectual property from imitators, rogue franchisees, and even inadvertent infringement is imperative to a successful and growing franchise. The trademarks and brand are an essential element to what makes a franchise system attractive to potential franchisees and even your customers. The top franchise systems are not shy about aggressively protecting their brand and shutting down any potential infringement as necessary. Take your investment in your brand and other intellectual property as serious as any other monetary investment and protect it from the outset.
Of course the first steps any franchisor has taken to protect their brand is to register the principal marks as trademarks with the US Patent and Trademark Office. This will provide federal statutory protection above and beyond the basic common law protections offered by use of the marks. One important note for those considering trademarking certain marks, you will be required to prove use in commerce to secure registration. This is something that typically confuses foreign registrants as it is acceptable in many countries to merely register the mark by filing and not requiring use in commerce.
Another interesting aspect of registering marks is a special brand type called ‘trade dress.’ Trade dress refers to the visual appearance and characteristics which give the product or service its unique presentation to consumers. Analyzing and registering trade dress can be time consuming but worthwhile for the franchise system which offers a comprehensive visual offering and appeal to consumers. Some aspects of trade dress for a franchise system can be the packaging of items, the unique color scheme, or even the layout or design of the storefront. It is also important to remember to have these trade dress items, especially if part of the layout or furniture design to be de-identified and removed upon any termination or expiration of a franchise unit.
Confidentiality and non-compete agreements should be another cornerstone of your franchise system IP protection plan. Both of these auxiliary agreements are typical in franchise agreements and generally personally bind the franchisee and their employees to not disclose confidential information nor compete with the franchise system. These are important to impress upon the franchisees that they are not permitted to disclose information about the system to others who may use it unlawfully in competition. Should any franchisee or employee go rogue and use the brand or IP improperly, these agreements typically allow an injunction to be issued stopping the infringing behavior and also assess damages for injury to the brand. These are major disincentives for potential rogue behavior.
Keeping your operations manual and other internal company documents on an internal server with password protection is another easy way to discourage misuse of your franchise system IP. In the past the operations manual and other docs would have to be mailed out with little extra protection guarding the content. Now with easily accessible cloud technology, these important company IP documents can be held closely by the franchisor with access limited to only those who need it, when they need it. Additionally, many cloud technologies have built in anti-piracy options which prevent unauthorized printing or copying digitally.
One oft-forgotten aspect of a franchise systems IP is any proprietary ingredients, recipes, spices, and other similar products. Some franchise systems, when they are just starting out, will disclose these to franchisees to create themselves in-house since it is more cost effective (cheaper) to have franchisees do this rather than develop a proprietary distribution system to protect the IP. This can have major repercussions for the system later hoping to maintain IP protection through a controlled distribution system. This is definitely something I try to counsel early franchisors on as they develop their system. Be proactive and keep your IP close.
Lastly, remain vigilant about confronting and remedying any potential infringement issues, whether by franchisees or third parties. Do not be slow or hesitant at taking charge and punishing potential misuse your IP. Without your vigilance and actions to stop potential infringement, you could lose your rights to your own IP by your inaction. This could be a devastating thing to happen to any franchise system and certainly to a younger and growing system. We are always on the look out with our clients for potential issues and react quickly to ensure our clients maintain the best protections for their IP and investment.
If your business is exploring franchising your concept or your franchise system need helps in protecting and developing your IP, reach out to Reidel Law Firm today to find out how we can help you. Reach us by the email button below or by calling us at +1(832)510-3292.
