A franchise system’s brand and image are among its most important assets. Customers quickly identify stores belonging to a franchise chain by things like the decor of the stores, the colour scheme used in that decor and in advertising, distinctive fonts used in its logo and its unique name. Look at the photo accompanying this blog post. The name and colour scheme of this franchise shop are striking and easy to remember. This franchise chain, Enerix, is a German solar energy equipment retailer, and the bright and green-based colour scheme suits that industry well.
Because of the importance of the brand/image intellectual property, franchisors usually make an effort to protect that IP. Usually these actions include: asking franchisees to use the IP only for permitted purposes, protecting slogans and logos by registering them as trademarks, and taking enforcement action against people who abuse the IP by using it without permission.
Franchisees pay a lot of fees for their franchises, and want to have the “brand recognition” that they have paid for protected from unfair and improper use by others. On the franchisor’s side, if the brand’s value is eroded by allowing counterfeiters to get away with using the brand, or franchisees to use the brand in inappropriate ways, the value of the branding and of the franchise system will diminish.
You may also be interested on our longer LinkedIn article on this subject.
If you require advice about a franchise agreement or on how to set up a new franchise system (which can begin by setting up a second “cloned” store), please contact us.
[This blog post was written by James Irving, Perth franchise and commercial lawyer, who has both franchisees and franchisors as clients. This post is not intended as legal advice for any person. Photo credit: Enerix franchise shop by Enerix-knuth, published as a public domain image by Wikimedia Commons and used here under a CC BY-SA 4.0 licence.]