ABSTRACT
Franchising agreements establish a contractual relationship where the franchisor grants the franchisee the right to operate under the franchisor’s trademark, use proprietary ‘know-how’, and follow a specified business model in exchange for fees. A key aspect of these agreements is the licensing of intellectual property (IP), particularly trademarks and confidential information, which are crucial to the success of the franchise. IP protection, especially trademarks, forms the foundation of franchising, attracting investors and customers due to the goodwill and reputation associated with the brand. This paper explores the regulatory framework governing the licensing of IP in franchising, with a focus on trademarks and trade secrets, and highlights the role of franchise agreements in addressing issues such as IP use, protection, sub-licensing, and infringement. It compares the regulatory approaches of two major franchising markets, the US and China, providing insights into the legal protections afforded to IP in each system. Additionally, the paper discusses how franchisors manage and enforce IP rights, including developing training programs for franchisees and the intersection of IP with unfair competition laws. By examining the regulatory landscape and the importance of a unified approach to IP in franchise agreements, this study aims to offer practical guidance to franchisors and franchisees in navigating complex IP-related issues in their transactions.
Elsaman, Radwa, Licensing The Use of Intellectual Property: The Tale of The Two Franchising Market Tycoons (October 4, 2024), Cornell Legal Studies Research Paper; 64 Law Review of the Franklin Pierce Center for Intellectual Property (2024).
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