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Decoding the Franchise Disclosure Document From A to Z – Item #13 & 14

Straight and to the point, Items #13 and 14 of the Franchise Disclosure Document cover Trademarks and Patents, Copyrights and Proprietary Information, respectively.

What you’ll learn:

• The legal status of all intellectual property, including

  • Trademarks
  • Patents
  • Copyrights, and
  • Other propriety information, such as Trade Secrets

• You will also learn

  • How much use and access you have to the trademarks, etc.
  • In what capacity you may use propriety information, and
  • Where to find more details

These Items are generally brief, because they’re very matter of fact and will refer you to other Items for further details. Don’t underestimate their weight, though.

Why is this important?

When buying a franchise model, you’re buying the right to use a brand. And the strength of a brand lies in its’ intellectual property. So, even though you’re buying a ticket into their exclusive club, it doesn’t mean you’ll have free reign with their guarded image.

Items #13 and 14 of the FDD will give you precise, to the point guidelines on the standing of all IP and how you may use it so that you don’t run the risk of jeopardizing the franchises brand image and reputation.
When you begin creating marketing materials, advertisements, social media or content marketing pieces for your new franchise, it will be important to know how you can use the company’s logo, slogans, or other registered marks. Some franchises have stricter guidelines than others – or distinctive nuances – so don’t assume that it’s going to be cut-and-dry.

In addition, Item #13 is often cross-referenced with Item #11. Item #11 – if you recall from our ongoing series – offers the finer points about the advertising support that you’ll receive from the franchise. The two go hand-in-hand so, although you may have already read #11, be sure to refresh yourself on the details.

Be on the look out for trademarks and other IP that have not been registered. A legitimate organization will have taken the proper steps to protect their brand name and image. If they’re missing registrations, find out why. IP is tricky business, and no joke in the courtroom, so you don’t want to get involved in a company with IP issues.

The bottom line is that Items #13 and 14 of the FDD are critical, albeit short. A company’s entire image is based on their IP, logo, slogan, etc. When it comes to a franchise, then, branding is absolutely essential and therefore – generally – very well protected. Make sure that you understand Items #13 and 14 and cross reference them with other Items to get a full understanding of the company’s IP, brand image and rules surrounding each. For more information on the importance of a franchise brand, check out this article from The Franchise King.

Next week will be interesting! Item #15 of the FDD will tell you how much time you’ll be required to devote to your new business. Stay tuned….