FRANCHISING AND INTELLECTUAL PROPERTY

Intellectual Property forms an important element of franchising. This is because the Franchisor (or an associated entity, sometimes called a "Licensor") will own:

  • one or more common law or registered trademarks; 
  • copyrighted material; 
  • trade secrets;
  • know-how; 
  • business systems; and
  • other confidential material,

which is then licensed to Franchisees as part of a franchise system. 

In that sense, Franchising is one way to commercialise intellectual property rights. Refer to commercialising IP for more details.

Through the Franchise Agreement and ancillary documentation, the Franchisor will grant its Franchisees a licence to use the intellectual property thereby giving the Franchisee benefits such as:

  • associating the Franchisee's business with a recognised brand; and
  • obtaining a kick-start to its business venture (via use of the Franchisor's established systems and processes).

The Franchise Agreement will include certain confidentiality and restraint obligations on the Franchisee not to use the intellectual property other than for authorised purposes. Notwithstanding this, it is still important that Franchisors and Licensors have IP protective strategies in place.

Protecting IP Rights for Franchisors

For entrepreneurs looking to adopt franchising as a business growth strategy and for existing Franchisors, it is important to recognise that appropriate business planning that incorporates an IP strategy is important for the health of the franchise system and to maintain value in the IP as an asset. For example:

  • understanding what IP you own;
  • ensuring your IP is properly registered and maintained; 
  • having a broad portfolio of IP rights, such as, different trade marks that are also registered in different jurisdictions; and
  • enforcing your IP rights where warranted.
chain, protection, security, linked chain

For Franchisors

If you are:

  • considering using a franchise model as a method to expand your business; or
  • an existing Franchisor and unsure whether your current IP strategy appropriately protects you,

Greyson Legal has extensive experience in dealing with intellectual property rights in connection with franchising. We can provide you with advice and guidance regarding a suitable IP strategy for your business.

For Franchisees

Franchisees considering entering into a Franchise Agreement should make sure:

  • the intellectual property to be licensed under the Franchise Agreement exists, is current, is registered (such as, trade marks) and are owned by the Franchisor (or the Franchisor has rights to sub-licence those IP rights to you);
  • they are familiar with the conditions and restrictions imposed under the Franchise Agreement in respect of your use of the IP.

If you are thinking about entering into a franchise, it is important to obtain advice form lawyers familiar wit this area of law - contact Greyson Legal

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