Skip to 0 minutes and 9 secondsWe'll now look at intellectual property in franchising starting with trademarks and copyright.

Skip to 0 minutes and 20 secondsMany global franchisors have valuable brands. For example, the McDonald's brand was valued at $81 million US dollars in 2015 and was the ninth most valuable brand in the world. The brand is what's known as intellectual property. It is the product of the mind.

Skip to 0 minutes and 44 secondsTrademarks are the most visible intellectual property, and they are the main identifying features of the franchise. They can be distinctive visual symbols, like the golden arches, or words in a particular font and colour, or even sound that immediately makes us think of a particular brand. Trademarks can be registered in each country or through a centralised registration system like the CTM System, the Benelux System, or the Madrid Protocol. Once a franchisor registers a trademark, it must be used or the registration can be challenged and may be forfeited. Trademarks can be used as security for loans. Franchisors grant licences to their master franchisees and franchisees to use their trademarks on strict conditions.

Skip to 1 minute and 42 secondsTrademarks should be registered in every country the franchisor intends to expand to. In some countries, the owner acquires the right to a mark by being the first to file for registration. In other countries, the first person to use the trademark has priority in the registration system. Not all words can be registered as a trademark. Some are too common or too specific. They can be left unregistered. Obviously, leaving them unregistered exposes them to being exploited as there is a risk that the person who created the trademark might have to fight hard to keep it.

Skip to 2 minutes and 24 secondsCopyright is the second important intellectual property right that is relevant to all franchises. Copyright can't aways be registered, but it can be indicated by the owner putting the copyright symbol on the work. Copyright protects the written expression of an idea or concept, rather than the idea itself. In franchising, the operations manuals are protected by copyright as is the franchisor's website, advertising material, bespoke software programmes, and layout designs. International copyright protection is governed by the 1886 Berne Convention for the protection of literary and artistic works and the 1955 Universal Copyright Convention. Franchisors always need to check the laws of each country.

Skip to 3 minutes and 15 secondsIn most countries, copyright protection is automatic, but there are some countries where a work must be registered before it gets full copyright protection.

Intellectual property

“At the heart of every franchise agreement is a trademark licence” (Meiklejohn, 2013).

“Intangible assets, also referred to as intellectual properties (IP) have become the most valuable assets of the twenty-first century.” (Schaeffer and Robins, 2008)

We’ll now look at intellectual property issues in franchising. One of the main attractions of buying a franchise is the ability to trade under the franchisor’s established trade mark. A franchisee pays for the right to use the franchisor’s trade marks for a fixed term. This purchase will permit the franchisee to market and sell the franchise products and services.

The related intellectual property includes logos, promotional material, a business system, operating manuals, a marketing system, various confidential know-how processes (trade secrets), and standardised shop fit-outs.

The brand is what’s known as intellectual property. It is the product of the mind.

  • Brands = trademarks + tradesecrets + copyright + patents

Many global franchisors have valuable brands – for example the McDonalds brand was valued at about US$81 billion in 2015 and was ranked the ninth most valuable brand in the world.

Trademarks are the most visible intellectual property and are the main identifying features of the franchise. They can be distinctive visual symbols, like the Golden Arches, or words in a particular font and colour, or even sounds that immediately make us think of a particular brand.

Copyright is the second important intellectual property right that is relevant to all franchises. Copyright usually can’t be registered but it can be indicated by the owner putting the copyright symbol on the work (©). Copyright protects the written expression of an idea or concept rather than the idea itself.

International copyright protection is governed by the Berne Convention for the Protection of Literary and Artistic Works (1886) and the Universal Copyright Convention (1955).

In this video Dr Jenny Buchan will go into more detail on trademarks and copyright in the context of international franchising.

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International Franchise Law: the World is Yours

UNSW Sydney

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