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.
