Maximise Your Intellectual Property to Enhance Franchise Value

Maximise Your Intellectual Property

To Enhance Franchise Value

Introduction

In essence, franchising is an intellectual property (IP)-based business model since it offers a conducive environment for IP commercialization. Franchisees profit by gaining access to an established brand to help launch their own businesses, and franchisors profit by allowing use of their intellectual property (IP) (including trade marks, patents, designs, copyright materials, know-how, and/or confidential information) in exchange for a fee.

In order to safeguard their IP and maximise the value of their franchise offering, franchisors need consistently put their intellectual property (IP) at the forefront of their business activities.

1. Recognize and Assess Your IP Due to inaccurate assessments of their intellectual property and its potential for protection, businesses frequently undervalue their IP. In the long run, this could lower the value of the IP. The franchise parties may discover that the brand value is abruptly harmed, for instance, if a franchisor has failed to appropriately assess and protect its brand(s) and its trademarks are unregistered or judged to be unenforceable. This may even necessitate a costly rebranding and expose the franchisor to franchisee lawsuits. Contact the franchising lawyers for a consultation if you have any questions regarding this.

Have your IP correctly evaluated from the beginning and keep talking about any potential IP developments for your company. Making sure valuable IP is documented and recorded is the goal of this identification process. Even while a franchise firm would normally place the most emphasis on know-how, trademarks, and copyrights, ongoing documentation and assessment should cover all areas of IP. After doing this identification procedure, franchisors should review their model franchise agreement to make sure it specifies the elements of the franchisor's IP that franchisees may utilise. Uncertainty results from inadequately defining the intellectual property (IP) that franchisees are allowed to use, but perhaps more crucially, it may lead franchisees to doubt the IP's worth, which could reduce their interest in investing in the franchise network.

2. Protecting your IP Failure to immediately protect and register their IP is another frequent problem for franchisors. This generally becomes a problem when the franchisor wants to sell its company or wants to geographically extend its network, for example, because third party rights restrict access to markets.

The inability to stop third party copycat enterprises will be another problem brought on by a failure to safeguard IP across jurisdictions, in addition to market access. The bigger the scope to pursue such rights against allegedly infringing third party use, the more IP rights you have discovered and documented, including both registered and unregistered rights.

Make sure all valuable intellectual property is secured, paying close attention to the brands in use, where they are already used, and where you would like to expand their usage. Register any trademarks that are crucial to the service or product that the business is providing. Any valuable innovations, designs, or trade names may be registered.

It will also be crucial to continuously record the growth of copyright materials and know-how so that the firm can determine when these are developed and put in place the necessary protection systems. Franchisees investing in the franchise network will feel more secure as a result, which will ultimately raise the franchise value as a whole.

3. Observe and Control Use Franchisees and other parties, including third parties, who may try to use a franchisor's intellectual property (IP) for their own gain, may gain access if the franchisor fails to record and register (where possible) its IP. Certain hazards are unique to franchise operations. When franchisors do not strictly enforce the rebranding of franchisees' businesses upon termination, one such risk concern is the possible negative impact on brand value. If the former franchise company using the trademark was shut down due to customer complaints, fraud, or subpar products or services, there is a specific risk involved.

Franchisees also want to see action taken to show their valuable access to rights that are otherwise unavailable for use by competitors where pure third party IP infringement occurs.

From an IP standpoint, you can put in place watches to help with this, such as domain name and general internet watches, competitor watches, and register watches for your important brands.

Try to act quickly where former franchisees are concerned. Don't rely on them to selfreport on this issue; personally verify that they have fully rebranded before allowing them to depart the firm. To preserve the value of the company's intellectual property, be ready to take legal action against persistent infringement of those rights. Other honest franchisees will want to see their ownership position in the company secured.

Additionally, failing to do so could harm the reputation of the brand.

Conclusion Based on its valuable intellectual property, a franchisor can licence a tried-and-true brand and business strategy with a solid reputation and established market.

A strong franchise will continuously examine and manage its IP to make sure these important rights are preserved and documented. A franchisor must actively maintain and suitably safeguard its IP in order for a franchise to continue to be valuable to both the franchisor and the franchisee. Last but not least, franchisors must keep an eye on the market to make sure that breaches are immediately discovered and dealt with. If they are not, the perceived value of the franchised firm may be quickly diminished and questioned by current or potential franchisees.