1851

At the heart of franchising is an agreement between the franchisor and franchisee to share key information and processes that have contributed to the success of the business in exchange for a franchise fee and ongoing royalty payments. However, in order to protect the information associated with the business model, the franchisor must be sure to have legal intellectual property (IP) measures in place, which prevents franchisees from “borrowing” proprietary information, secret recipes, branding assets and more.“Intellectual property rights, specifically trademarks, patents, copyrights, and trade secrets, are at the heart of a franchise agreement,” explained&nbsp;<a href="https://www.linkedin.com/in/mark-brutzkus-3131025/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=chapter-7-protecting-your-intellectual-property-2722573" target="_blank" rel="nofollow">Mark Brutzkus</a>, a partner at&nbsp;<a href="https://stubbsalderton.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=chapter-7-protecting-your-intellectual-property-2722573" target="_blank" rel="nofollow">Stubbs Alderton &amp; Markiles, LLP</a>. “In a franchise agreement, it is important that the franchisor is the owner of, or has the legal right to use, the franchise’s intellectual property, including trade names or trademarks. Also, it is critical that the franchise agreement contains provisions to keep trade secrets, i.e. ingredients of a secret sauce, confidential and not disclosed.”There are four primary types of intellectual property that are crucial for businesses to be aware of: copyrights, patents, trademarks and trade secrets.Copyrights&nbsp;cover music, pictures, art, writing and other similar pieces of work. For businesses, this often applies to whitepapers and websites.Patents cover inventions. If a franchisor comes up with a novel way to complete a common task or a brand new product to sell, this invention can be protected for decades, allowing the business to proceed with production and sales of the tool or product without fear of another company replicating the model.Trademarks cover a word, phrase, symbol or design that represents something specific. In franchising, the most important things to trademark are the logo, slogan and set of designated brand colors.Trade secrets&nbsp;are anything unique to a company that has helped them succeed. This can be a secret recipe, distribution process, marketing strategy, and even lists of vendors or clients. Franchisors should protect these to ensure former franchisees are not profiting off of using the same business model they learned about during their time in the franchise system.“The primary issue is that business owners may overlook the importance of IP,” Brutzkus said. “The ownership of IP rights prevents third parties from reproducing the franchise business model, which allows the franchisor to be paid royalty payments from the franchisees. Another noteworthy factor is that based on the nature of the franchise, a critical component of the franchise agreement may be maintaining the confidentiality of trade secrets that help create brand value.”Without intellectual property protections, a franchisee could legally replicate the franchisor’s business model, negating the need for any type of franchise agreement or royalties paid.<h3>Protecting Franchisors’ Intellectual Property</h3>Intellectual property protections start as early as the development of the franchise agreement. As a franchisor works to put together a franchise agreement and franchise disclosure document, it is almost always best to retain a qualified attorney.“Given the importance of intellectual property, specifically trade names, trademarks and trade secrets, it is critical that the franchisor retain IP counsel to take the necessary steps to protect itself,” Brutzkus added. “This can help avoid legal headaches down the line.”During this process, key members of the franchisor’s leadership team should be involved, ensuring they understand the bounds of the agreement and the importance of each regulation. With this information, they will be well-equipped to keep an eye on franchisees’ use of intellectual property and know when local owners are overstepping the bounds of the agreement.Brutzkus explained that the franchisor should monitor and police “franchisees’ use of the franchise’s intellectual property to ensure it falls within the scope of the franchise agreement.” Should the franchisor notice a franchisee improperly using intellectual property, they can move forward with any consequences or damages associated with a violation of the franchise agreement.

Chapter 7: Protecting Your Intellectual Property

1851 Franchise

Intellectual property rights are crucial to franchising, allowing franchisors to maintain control over crucial information and practices that have led the concept to success.

chapter-7-protecting-your-intellectual-property

HomeTeam Inspection Service

HomeTeam Inspection Service Highlights Strong Franchisee Performance and Tech Innovation in Successful Second Quarter

hometeam-inspection-q2-2025-growth-expansion

TWO MEN AND A TRUCK

TWO MEN AND A TRUCK Celebrates 40 Years With Growth, New Franchise Signings and Charitable Milestones in 2025

two-men-and-a-truck-celebrates-40-years-with-growth-new-franchise-signings-and-charitable-milestones-in-2025

Express Employment Professionals

Express Employment Professionals Offers 50% Off Its Franchising Fee in Select Markets

express-employment-professionals-offers-50-off-its-franchising-fee-in-select-markets

Woodhouse Spas

image of woodhouse spa building franchise spa treatment

Woodhouse Spas’ Culture of Excellence, Support Further Elevates Top-Performing Franchise Opportunity

woodhouse-spas-supportive-franchise-culture

Sola Salons

Image of sola salons franchise spa industry interior of a franchise building

Sola Salons 2025 FDD Savings: How Data-Driven Adaptation Has Cut Costs for Franchisees

sola-salons-2025-fdd-savings

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Planet Fitness Franchisees Donate $100K to Support Texas Flood Relief - 1851 Franchise

Planet Fitness Franchisees Donate $100K To Support Texas Flood Relief

planet-fitness-texas-flood-relief

McDonald’s Is the Latest Franchise To Bet Big on Beverages with 500-Store Premium Drink Test

mcdonalds-is-the-latest-franchise-to-bet-big-on-beverages-with-500-store-premium-drink-test

Friendly’s Parent Company Acquired by Multi-Unit Franchisee as More Owners Take the Lead in Brand Acquisitions 

friendlys-parent-company-acquired-by-multi-unit-franchisee-as-more-owners-take-the-lead-in-brand-acquisitions

Subway - John Fitzpatrick Named CEO - Breaking News - 1851 Franchise

Subway Names Jonathan Fitzpatrick as New CEO, Effective July 28

jonathan-fitzpatrick-subway-ceo-leadership-change

AI Is Reshaping Franchising: $100 Billion Valuations and Hyper-Localized Advertising

ai-is-reshaping-franchising-100-billion-valuations-and-hyper-localized-advertising

Home Halo Franchise Costs, Fees, Profit and Data for 2025

home-halo-franchise-costs-fees-profit-and-data-for-2025

How Food Franchises Are Innovating To Win Over Health-Conscious Consumers

food-franchises-winning-over-health-conscious-consumers

Jollibee -Launch-Story-Brand-Page-Deep-Dive-2025

Jollibee Franchise Costs, Fees, Profit and Data for 2025

jollibee-franchise-costs-fees-profit-and-data-for-2025

BODY20 Franchise Costs, Fees, Profit and Data for 2025

body20-franchise-costs-fees-profit-and-data

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores - Agg - 1851 Franchise

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores

hooters-franchise-model-company-owned-closures

Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

brass-tap-franchise-pasadena-maryland-hely-hiral-patel

DevHub - Meet the Supplier - 1851 Franchise

DevHub: Scalable Digital Marketing for Franchises and Multi-Location Brands

devhub-meet-the-supplier

1851 Keyword - The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

part-time-franchises-picking-the-right-model

graphic image of a franchisee spotlight jeff kinkade of trublue home service ally

After Building One Home Services Business, Jeff Kinkade Is Doing It Again — This Time With His Son

jeff-kinkade-trublue-north-johnson-county

Navy Veteran and Professional Artist Couple Open Caring Transitions in Texas

Navy Veteran and Professional Artist Couple Set Out to Build a Purpose-Driven Business With Caring Transitions in Texas

navy-veteran-and-professional-artist-couple-set-out-to-build-a-purpose-driven-business-with-caring-transitions-in-texas

Chapter 7: Protecting Your Intellectual Property

MORE STORIES LIKE THIS