FRANCHISING AND THE SIGNIFICANCE OF IP PROTECTION

Over the past few years, major international brands have been focusing on the Indian market for expansion through franchising. In addition, domestic businesses have been modernizing rapidly, and franchising has become increasingly popular across the country as a business expansion method. Franchising is a unique business model with the franchisor’s intellectual property at its core. Intellectual property can include trademarks, copyrights, trade secrets, trade dress (i.e. the look, feel and distinctive elements of a franchise system such as the interior design, layout and other visual aspects of a franchise location), patents and the trade names under which franchise businesses operate.

Maintaining Exclusivity

A franchisor reserves the right to use any and all skills, expertise, knowledge and knowhow in the provision of similar services to other franchisees and/or potential franchisees and a franchisee shall place no restriction whatsoever on such rights. Before commencing a franchising relationship, a prospective franchisor must ensure that all the relevant intellectual property associated with the business is adequately protected. If the intellectual property is not protected, competitors may be able to use the franchisor’s intellectual property. This is particularly the case if the intellectual property of the franchisor is generic or not sufficiently distinctive.

These rights also need to be of continued use in the country of origin and the franchisor needs to have a policy of taking action against anyone who uses such property without permission. It is very important for all of the franchise’s intellectual property to be protected both by legal means and by the franchise agreement between the franchisee and franchisor. A franchisor being a lawful owner of its trademark can protect the same by taking legal course through infringement suit before any court of law and also by contesting opposition proceedings before the Registrar of Trademarks. One should keep an eye on competitors as well as on infringers copying the trademark, which can adversely affect the reputation and long lasting goodwill of the brand owner.

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