Your Franchise business presumably has a unique service and/or product to offer, and you believe you have developed a “secret source” to make it succeed. Why would anyone else pay you good money to replicate your business model? The secret’s in the source, of course, assuming you have the source and others want and need it.

Most potential Franchisor’s I have spoken to assume that their business-brand to be protected is best achieved through trademark protection. This is distinctly not the whole story! Actually, what you are franchising is your intellectual property (IP) Portfolio in all its glory. And this includes all those critical distinguishing and working elements that enable you to make and sell your secret source.

Do you actually know what your franchise-able IP is? Let me help you with a shopping list of options: do you have novel technology, software, or processes that can be Patented, unique Designs, distinguishable Trade Dress or visual image of your Brand, words, logos, sounds, smells or 3D shapes that can be Trademarked, recipes, codes and algorithms that can be Copyrighted, Products that can be protected as Utility Models, Domains that you may or may not own, and real secret source components, formulas, know-how and operations manuals that you consider your Trade Secrets??

Franchising may be defined as a business model built on IP, such that the franchising model is essentially a tool for commercializing the Franchisor’s IP. Further, the Value of your Franchise will be largely determined by the smart development of a relevant portfolio of IP Assets. In other words, franchising may be described as a method of licensing the Franchisor’s IP to distribute goods or services. The Franchisor, as owner of the businesses’ IP rights, gives usage rights to a Franchisee, who pays royalties or fees for the usage of the Franchisor’s IP. So my challenge to you, dear Franchisor, is to get your IP ducks in line, or go to the back of the line!

You ought to be mindful that as a Franchisor, you are entrusting your Name, Brand, and ultimately the Reputation of your successful business into the hands of your Franchisees. If a franchised business fails, damages or disappoints, this could and will cause harm the reputation of the Franchisor’s business and well as the other Franchisees. How can this risk be minimized? Clearly, the artful management of your IP, leveraged using best practices and well working business systems, will give your Franchisees the keys to success.

I wish here and now to stress the importance of taking timely steps to identify and protect your IP early – as these rights may be lost or damaged if they enter the public domain without appropriate protection. A valuable franchise will also need to actively track, develop and maintain its IP, to continue to be valuable for both the Franchisor and the Franchisee. Smart Strategic Management of your IP will be needed to let your Franchisees fly forward, yet come back home to the corporate ark for ongoing support, protection and growth.  

To the Future!

Yaron Damelin
Strategic IP Management Consultant