The importance of brand protection for franchises – don’t forget taglines as well!

It is a plain fact that the attraction of a franchise is to take advantage of a set of a well-established system and brands that are proven to work.

From a franchisor’s perspective, it is therefore crucial to ensure that they own and protect all intellectual property relating to their business, whether in the form of trade marks, copyright, patents or designs.

Contrary to popular belief, the law does not protect ideas or concepts per se.

However, it does offer protection for the expression of those ideas. For example, you cannot protect the idea of having a cupcake chain, but you can protect the specific images and logos used for that chain.

The menus and the wording of any marketing materials are also protected under copyright laws (as “literary works”).   

Trade marks

Brand names, taglines and catchphrases differentiate your business from others. OH WHAT A FEELING equals Toyota. JUST DO IT equals NIKE, and so on.

 “Coca-Cola” for example is a registered trade mark, but the Coca-Cola Company has also registered its taglines in Australia such as; “OPEN HAPPINESS”, “GET CAUGHT RED HANDED” and “THE TASTE OF COOL”.

Business names – where do they fit in?

Another common misconception is that a registered business name provides ownership over the name itself.

Not so. While it may seem “official” it is merely administrative.

This can cause problems if you decide to franchise your business model with only a business name in place and someone else has registered a trade mark similar to yours.

A further fallacy is that you cannot register taglines.

As mentioned above, taglines and slogans can make very effective trade marks, especially if they are unique and distinctive (you will find relevant examples below).

Uniqueness

Having brand names and taglines that are unique is vital – not just from a marketing perspective, but also so that they can be registered as trade marks.

To be registrable, trade marks must not describe the goods or services in question.

There may be a number of possible solutions if you have already chosen a descriptive term (such as showing long term use of that term), however, it is far easier and “pain free” to get it right from the outset. Given that you provide franchisees with exclusivity and a licence to use the brand, it is crucial that you own the brands and all elements of it (e.g. taglines).

Conclusion

 This short article only gives you a “taste” of intellectual property and brand protection in the franchising context. 

 The aim has also been to emphasise that taglines can be protected as registered trade marks.

 Since trade mark registrations are granted on a “first come first served” basis, it is important to apply as soon as you can.

 This is a highly complex area of the law and it is recommended that you seek the advice of a lawyer or trade mark attorney.

 *Sharon Givoni runs her own legal practice with a focus on commercial law and intellectual property law with many clients in the franchise industry. She can be contacted on 03 9527 1334  / 0410 557 907 or emailed on sharon@iplegal.com.au. Her website is located at www.sharongivoni.com.au

 Disclaimer – The contents of this article must not be relied upon as substitute for professional legal advice

 © franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

© franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

In summary, incase you don’t have time or the inclination to read the transcript;

A franchisee couple has been awarded $1.22 million in damages after a successful appeal against franchisor Billy Baxter’s™

The franchisor’s representative, advised the franchise prospects that he anticipated a turnover for the business of $1.3 million, and suggested that the turnover would allow the business to pay the rent and return a profit.

These representations – made during the course of negotiations for the site at Glenelg – drew comparisons with an existing Billy Baxter’s™ outlet in Norwood, another Adelaide suburb.

However, the Glenelg franchise suffered losses, which meant the franchisees were unable to pay the fees due under the franchise agreement. They then terminated the franchise agreement.

The original judgment found in favour of the franchisor, however, a Victorian Supreme Court of Appeal decision has found there were no reasonable grounds for The Franchisor’s representative to make the representations regarding turnover and has awarded the damages payout to the franchisee.

 To read the full court transcript click here  Billy Baxter Franchising Case

 © franchisingplus

  http://franchisingplus.com.au

 Author ; Carolyn Dufton Dip.Bus(franchising)

 Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

 The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

If franchising is not fun, as a franchisee or a franchisor, identify why not – and then do something about it.  

Today I attended a networking breakfast.

I’ve never met with this group of people before.

As we went around the room and introduced ourselves, I realised that out of 18 attendees the room contained 5 franchisees.

Taking every opportunity available to talk to franchising colleagues, I seized the moment to ask a few of the franchisees about their franchise systems and their individual businesses.

It was heartening to speak to franchisees who loved their businesses and were thriving on the camaraderie that existed in their franchises.

One lady explained that their 2012 annual conference was in Thailand and that all the franchisees were thrilled and excited to be attending this “get together”. She went on to say that the attendance rate to this conference was 80%. Regional meetings were always well attended and eagerly anticipated.

This Franchisor and the franchisees need applauding!

So what happens when franchisees are not having fun? There will always be some franchisees that are not happy in a franchise system.

The unhappy franchisees tend to be the franchisees that will not participate in group events and even allow themselves to get to know and have fun with the other franchisees.

A wise Franchisor and the team will take the time to identify the root causes for the franchisee’s attitude. It could be as simple as the franchisee being an introverted person, but quietly happy with their business.

Engaging with a franchisee and having a meaningful conversation may assist in providing clarity about the franchisee’s attitude which can benefit both The Franchisor and the franchisee.

An unhappy franchisee can be the bad apple in the basket that starts turning others sour.

Franchisors can find dealing with a disillusioned franchisee to be so difficult that they ignore the problem and allow the franchisee to become an island.

My advice is for Franchisors to get to the root of the problem with the unhappy franchisee as quickly as possible and if the problem isn’t “fixable” encourage the franchisee to exit the system with minimal fallout.

Franchisees who involve themselves in franchise gatherings benefit in so many ways;

• They find camaraderie amongst other franchisees.
• They realise that the challenges they’ve been having are often the challenges of many. This provides comfort.
• They are able to brainstorm challenges with other franchisees and The Franchisor.
• They can offer support to other franchisees and in turn receive support.
• Franchisees are genuinely interested in each others’ businesses.
•  Other successful franchisees can provide inspiration.
• They are provided with ongoing education and training.
• The value of franchisee “sharing” of experiences cannot be over estimated.

                             FRANCHISEES HAVE FUN!

 But more seriously, what happens when The Franchisor stops enjoying the business?

 I know disillusioned Franchisors exist because I’ve spoken to many.

 A Franchisor cannot discuss or share their own challenges with the franchisees. Being a Franchisor can be a lonely and isolated place.

 A disillusioned Franchisor should seek objective guidance and advice from someone who understands franchising.

 The Franchisor sets the culture for the franchise, and it’s likely that if a Franchisor isn’t having fun, neither are the franchisees.

 So if franchising and fun are not synonymous in your business, maybe it’s time to exit?

 This article is the copyright of Carolyn Dufton. All rights reserved.

Carolyn is a franchising consultant and the principal of franchisingplus.

Her recently published book The F World. Franchising, The Best, The Worst and The Scary expands on this article and the best and worst aspects of franchising.

Many businesses are wary of franchising their business and describe their business model as a licence arrangement, a distributorship or an agency. The benefits of franchising are many as are the penalties for not behaving as a franchise if your system suggests this. 

Seek sound advice now before The ACCC come and seek you first! It may only be a matter of time.

© franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

No business can ever be perfect or have systems that will not need to be adapted at some time.

Don’t waste a current franchising opportunity by waiting for your business to be perfect.

© franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

So how does procrastination affect a business?

Can procrastinating be a good thing?

What does it actually mean?

The dictionary states that it is a deferring of action. Delaying something needlessly.

If those definitions were applied to business growth few business owners would consider procrastination to benefit their business nor be a good thing.

There is a huge difference between research, fact finding, due diligence versus procrastination. The fore mentioned words are essential in any business planning or decision making, whereas;

procrastination is purely an avoidance of action.

So let’s consider the opposite to procrastination. Well, there doesn’t seem to be one word that fits the bill.

I have looked at websites that suggest the following opposites;

• Action taker
• Decisive
• Pro-active
• Go –getter

These words resonate with me much more.

These are the sorts of business owners that I love to work with.

When dealing with a crucial business decision they undertake their fact finding, research and due diligence.  In the case of deciding whether franchising is suitable for their business they undertake a franchising feasibility study with franchisingplus which provides financial information and an objective report on the reality of franchising.

Once armed with all the facts and information they need to make a decision, they proceed to franchising their business almost immediately OR they recognise that the business is not ready for franchising and follow the recommendations in the feasibility report.

Either way, these business owners have not procrastinated about undertaking a franchise feasibility study, they have taken action in their business which will allow them to grow profitably and effectively.

Meanwhile the procrastinators sit and watch the grass grow……………….

© franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

The question is, do Franchisors really have a choice as to whether or not they should grow their franchise network ?

Let us consider;

• How will a potential Franchisee view your network if you have not sold any new franchises in the last year?

This could be seen as being a more high risk venture for them. It could suggest that you are not serious about your role as a Franchisor looking to grow the business for the benefit of all.

• How do existing franchisees perceive a stagnation in growth and expansion? Could they feel more vulnerable and feel that the Franchisor is losing sight of the big picture?
• Ask yourself, why aren’t you selling more franchises?

Is it a deliberate strategy? Are you consolidating? If so, let your franchisees know that this non expansion is only temporary and keep them informed of your franchise growth plans so they’re not left guessing.

• Is there a ”right” number for annual expansion plans?

Although there is no right number, the best expansion policy is gradual and consistent so as not to overwhelm the Franchisor and burdon the infrastructure. The larger the system and managment infrastructure the greater the capacity there is for expansion.

• Franchisors need “new blood” in their system. It’s good for the business. BUT it is vital that Franchisors do not compromise in their new franchisee recruitment process.

Franchisees must meet the necessary criteria to ensure a continuing high standard of franchise and alignment to the current system and people.

Professional advice should be sought to assist with the growth strategy.

 © franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

Under section 6 of the Code, franchisors must update their whole Disclosure Document within 4 months of the end of the financial year, which for most franchise systems is 31 October 2011.

Key points to remember are:

Any franchisee entering into an agreement after 31 October 2011, whether it be as a result of the grant of a new franchise, a resale, a renewal or just as a result of parties entering into an agreement that varies a prior franchise agreement; must have been given the current franchise documentation i.e. updated to at least 1 July 2011, at least 14 days prior to the signing of such documents.

Existing franchisees have the right to request, once every 12 months, that a current Disclosure Document be provided to them. This demand must be met within 14 days of their demand.

The ACCC can as part of their audit powers require a copy of the past and current Disclosure Document and related franchise materials at any time, and franchisors must generally comply within 21 days.

Disclosure Document review

It is recommended that the whole disclosure document should be reviewed with relevant sections updated as required, but pay particular attention to:

• updated your current list of franchisees and any franchisee that has been transferred, terminated or ceased to operate in the last 3 years. 
• Any changes to franchise recruitment and suppliers arrangements;
• finalised and updated disclosure regarding the Marketing Fund’s expenses for the last financial year;
• updated disclosure regarding any unilateral variations to your franchise agreement in the last year (new requirement from the Code 2010 amendments which now has to be completed);
• updated disclosure regarding whether you have taken into consideration any significant capital expenditure by franchisees when determining renewal or expiry arrangements in the last year; (new requirement from the Code 2010 amendments which now has to be completed);
• updated all Item 13 costs, including recurring or isolated franchisor and third party expenses within the knowledge of the franchisor or reasonably foreseeable by the franchisor. Thus, this includes payments made to the Franchisor or any other third party when initially entering into and during the term of the Franchise
• ensured that Franchisor’s end of Term arrangements are clearly defined.

 Financial information:

• Financial reports for the Franchisor for the last two financial years should be readily available
• OR a copy of an independent audit by a registered company auditor, confirming that as at end of last financial year, i.e. 30 June 2011, the Franchisor company will be able to meet its debts when due.  

 Marketing Fund update:

Prepare an annual financial statement for the marketing fund, and have the financial statement audited by a registered company auditor within 4 months of the end of the financial year.

 © franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

Recently I had a very unsatisfactory customer service experience with a local franchised business. The manager wasn’t on the premises so I asked the young assistant to ask the manager to call me. He didn’t, so I rang the shop to be told that the manager was too busy to talk to me about their customer service.

I decided to see if The Franchisor was more customer service focused and aware, by posting on both Facebook and Twitter. It went something like this “Had a truly awful experience at ‘company name’s’ local store today, and the manager doesn’t care”. I waited to see whether the company would pick up the comment. They didn’t.

So to give them a second chance – I posted again. I had lots of comments from other people who saw the post but none from the company.

Google alert is a tool that allows businesses or individuals to monitor for free, what is being said about their company in the online world. It is a free service.

You can’t stop people talking about you online, but being aware of what they’re saying allows you the opportunity to respond quickly to diffuse a situation.

You do not have to be engaged in social media to use this tool. Google will send you an email of whatever message they find online. Twitter will also pick up any “mention” of you if you subscribe – again for free.

In my opinion all businesses and Franchisors in particular, need to be informed about what is being said about their businesses online, and Google Alert provides an easy and free method of achieving this.

Go to www.google.com/alerts to set up your alert today. No excuses now!

 © franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/