Franchising FAQ - Intellectual property where it is developed by franchisees, employees or contractors?

Date: March 04, 2011

Q. What should franchisors do about intellectual property where it is developed by franchisees, employees or contractors?

A. Franchisors should have procedures which enable them to prove that they are the owner of all intellectual property and that no person, particularly a third party or external contractor, is able to claim any interest or entitlement including any moral rights. 

A separate entity should be established to hold intellectual property.  This is particularly important if the franchisor is operating corporate stores or considering international expansion.  It can also make complying with the Franchising Code easier and enable the franchisor to avoid disclosing total group profit.