Franchising remains a popular way for brands to grow. Whilst ACID’s main focus has been on intellectual property protection, one of the organisation’s other key objectives is to ensure that IP is viewed as a positive force and fully utilised to commercialise and leverage a brand’s full potential. One of the most lucrative ways to extend a successful brand is to consider franchising. Last year the franchising industry grew twice as fast as the UK economy, according to a recent survey carried out by Nat West and the British Franchising Association.  Turnover in the sector has grown ten-fold since the 1980s to nearly £11 billion.

Dids Macdonald, ACID’s Chief Executive talked to Tom Bridgford, Head of Franchising at ACID’s accredited law firm Hammonds who explained that, “A franchise is a business method in which a firm which already has a successful product or service (the franchisor) allows other businesses (franchisees) to operate under the franchisor’s brand.  The franchisor provides intellectual property, know-how, training and guidance.  In return, the franchisees provide fees, royalties, an advertising levy (for the franchisor to re-invest in advertising the brand nationally), but above all, the will to expand the brand’s reach”.

So why is franchising so popular?

Franchising is a tried and tested way of doing business which allows brand owners to grow their businesses with relatively low capital investment.  It offers the opportunity to secure distribution for products or services faster than would be the case if the franchisor had to train its own employees and develop its own internal organisation.  Moreover, as franchisees are usually investing their own money, they are normally very committed and motivated to grow the businesses aggressively.The numbers speak for themselves.  The respondents to the Natwest/BFA survey showed 93% of franchisees reporting profitability and 82% of franchisors forecasting an improvement in their business.

What are some of the the benefits?

1)   If you wish to create additional outlets, franchising will enable you to expand by allowing others to finance and manage their newly created franchise

2)   In return you receive franchise “fees” or you can negotiate a mark up on what is sold

3)   A franchisee will run the outlet themselves, therefore releasing you from further management

4)   The more successful a franchisee becomes, the more your brand will become known so that you can capitalise on growth and development opportunities

5)   The more successful a franchise becomes, the greater the opportunities are to create possible savings through increased purchasing power.

What are the watchpoints?

Most importantly, a franchisee is only as good as the support, encouragement and motiviation you provide. A franchisee who does not represent yours and the brand’s best interests will have a detrimental effect on the brand’s credentials. Always ensure that regular, positive, communication channels have been established. Investment in developing and marketing the franchise is key, as are the franchisees that you select. so ensure that you have a strict criteria which you apply when vetting potential franchisees. Unless there are continuity of standards and service delivery within the franchise, there will be inconsistency, therefore the creation of your operations manual is important communicating the minimum standards to which the franchisee must adhere. Regular checks are an integral part of maintaining your standards. If you have not set up an IP audit or health check of your intellectual property rights before setting up a franchise operation, you run the risk of leaving your brand’s protection open to challenge. Always consult an IP specialist or an organisation such as ACID to advise on your legal protection for any trade marks, copyright, design rights or patents.

In a recent article, ACID explored the benefits of franchising as a means for brand expansion and growth. These benefits were underpinned by figures released by Nat West and the British Franchising Association, which indicated that the franchising industry grew twice as fast as the UK economy confirming that turnover in this sector has grown ten-fold since the 1980s to nearly £11 billion. Franchising is clearly a tried and tested way for brand owners to achieve these objectives with relatively low capital investment. So how do you set up a franchise which will offer the opportunity to secure distribution for products or services faster than would be the case if you had to train your own employees and develop your own internal organisation?  First and foremost, for a franchise to succeed,  it is important to remember this is a long term investment for all parties and should not be built on a one off idea, fad, gadget or lone product – the business model should be a successful tried and tested format upon which to expand. In the second of this series on franchising Dids Macdonald, ACID’s (Anti Copying In Design) CEO talked to Tom Bridgford of ACID Accredited Law Firm Hammonds on some key points to consider when setting up a franchise.

The System

You will need a concept or system which is capable of being franchised.  This will usually be a successful product or service with an established route to market, backed by a strong brand. As well as the brand, the franchisor will usually provide trade secrets, know-how and training to its franchisees.  This may include market knowledge and experience, sourcing expertise, customer contact details or manufacturing processes.  It is usually contained in a detailed operations manual which enables franchisees to trade effectively from day one.  All this is protected by confidentiality provisions in the franchise agreement. In addition to receiving a franchise royalty from franchisees some franchisors also sell their product to franchisees which gives added benefit, providing an important additional revenue stream for franchisors.

Protection of Intellectual Property

Protection of the franchisor’s brand and intellectual property rights are paramount.  They should be registered where possible, as they will form part of the franchise package.  This may include trade marks, design rights, patents or domain names. Information on registration can be obtained from The Office for Harmonization in the Internal Market or the UK Intellectual Property Office
Registration of intellectual property rights provides a franchisor with exclusive rights to prevent others from infringing those rights.

Franchisees

Finally, of course, you will need franchisees.  The most attractive franchisees are those not only with access to sufficient cash to fund their businesses, but also with the skills, enthusiasm and energy to drive their franchises forward. Clearly, a strategic plan for the development of the network backed by sound processes for franchise recruitment and selection will pay dividends. Sharing your commitment to succeed and each party looking at this as a long-term relationship will also play a vital role in franchise success.

Further Help

There are various organisations like the British Franchise Association who can help find franchisees. The online site provided by the BFA is also very useful. The Royal Bank of Scotland and some of the other high street banks have dedicated franchising teams who can offer advice. They will also provide financial advice and support geared to the specific needs of individual franchise businesses. Both organisations also hold seminars regularly. So if you’ve got a great product or service, a strong brand and the right franchisees, you’ll soon be in business!” Tom Bridgford is head of the International Franchising Group at law firm Hammonds.

Often callers to the ACID legal hotline will ask, how long it will take to set up a franchise? Clearly for any franchise to work effectively it will take time, patience and initial investment to set up the necessary systems and processes. Realistically, most organisations and advisors will say allow between 4 and 6 months. For franchising to succeed, like any other commercial relationship a sound and effective communications framework is essential, two way positive and constructive feedback being a key ingredient. If this is backed by a legally structured franchise agreement, which has been negotiated in good faith on ethical grounds then, if the business model is sound, franchising may well be an effective route to brand expansion.

GROUND BREAKING DESIGN LEGISLATION

In a ground breaking judgment between Procter & Gamble and Reckitt Benckiser at the Court of Appeal, Lord Justice Jacob has issued guidelines on how monopoly rights over designs should be interpreted in the future across the European Union. The relatively new registered and unregistered Community design has only been going for four years, and, as a result, there have been very few cases to clarify the position. Prior to this latest ruling the legal test was whether one product would provide the “same overall impression on the informed user” to an alleged copy. However, in his analysis Judge Jacob ruled that a variety of “differences” – from the “shape” of the head of Reckitt Benckiser’s Airwick Odour Stop sprayer to the “tapering off” of the can - provided a “different overall impression on the informed user” to the Procter & Gamble Febreze spray product thus changing the way this monopoly right will be relied upon in the future.

What is the definition of design?

“Design” means the appearance of the whole or a part of a product resulting from the features of, in particular, the lines, colour, shape, texture, contours, materials and ornamentation. The Registered Community Design is a monopoly right lasting 25 years, renewable every 5 years. It is valid in 27 member states.

Visit the OHIM website for more information

Following a successful legal challenge by artist Angela Hewitt of Angela Hewitt Designs Limited designs against Castle Melamine through ACID (Anti Copying In Design) Accredited law firm McDaniel & Co, Angela Hewitt has secured a settlement fee together with her legal costs AND an apology.

Isle of Wight based, Angela Hewitt is known for producing innovative artwork for printed material such as coasters, tablemats etc for sale to consumers, manufacturers and retailers and her designs are featured across the UK in leading retail outlets. In February 2006 the Scottish Seabird Centre approached Angela regarding using one of her designs, a puffin image, on placemats and coasters. She then approached manufacturers and distributors Castle Melamine with whom she had worked in the past for manufacturing and distribution purposes to supply Scottish Seabird Centre so that they could sell the placemats and coasters with her design to the public. Following further discussions she sent images to Castle Melamine with her standard terms and conditions. One month later, Castle Melamine rejected her terms and conditions based on her royalty fee of 10-15%; their fee being 6-7%.

Shortly after, she was shocked to discover the puffin image for sale on coasters at the Scottish Seabird Centre, who had been provided the image by Castle Melamine. Naturally, The Scottish Seabird Centre were extremely concerned that Angela Hewitt had not been approached regarding the use of her image. “I immediately called the ACID legal hotline and took advice from Niall Head Rapson.”

In the meantime Castle Melamine had been approached by the Scottish Seabird Centre for a further order and Castle Melamine contacted me offering me a 6% royalty fee, said Angela Hewitt, “I did give them a week or so to reconsider their offer as per our original terms but as there was no follow through with any compensation for what had happened previously and no improvement in their royalty offer, I re-contacted Niall Head-Rapson at McDaniel & Co who secured a settlement fee, legal costs and apology. I have taken the trouble to find out a terrific amount about the design rights I create in my products and I am determined to send the clearest possible message that I will pursue any infringement of my rights in order to protect my business”

Dids Macdonald, ACID’s Chief Executive said following the settlement, “Increasingly, artists like Angela are becoming very ‘savvy’ about their intellectual property and are prepared to stick up for what they have rightfully created. When creative talent is translated into commercially viable products the originator must be properly rewarded”.

Image of Puffin in PDF format

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The following comment was posted by IPKat on 1st October 2007 regarding changes to UK Trade Mark laws.

“Today’s the day that the The Trade Marks (Relative Grounds) Order 2007 enters into force. What this means is that the UK-IPO will no longer automatically block trade mark applications in relation to which there is a conflict with an earlier mark on the relative grounds. Instead, the owner of the earlier mark will be notified (if it’s a UK mark) and will be given the option of launching an opposition. The change has at least two principle aims: to give a level playing field to UK applicants, since OHIM does not routinely block applications on the relative grounds ex officio, and to make the system more market orientated – only marks which are valued enough by their owners to sink money into an opposition will be allowed to block applications.

The IPKat sees the wisdom in the changes. In an ideal world relative grounds examination would continue to take place, but there seem to be sound financial/competitive reasons for stopping it. However, he’s a bit concerned that the interests of consumers never seems to have got a look in. Even if a trade mark owner doesn’t think it worth protecting his earlier mark, if the earlier mark remains in use, a subsequent conflicting application and mark could confuse consumers.”

Visit the IPKat Blog

IP lawyer Geraldina Mattsson has started off her new career with ACID Accredited law firm DMH Stallard’s legal team, with a useful set of guidelines about setting up a webpage to sell and market your products regarding intellectual property rights. It is almost standard practice these days for businesses of any size to have websites to advertise and sell their products and services. Although the web’s popularity grew exponentially in the mid-90s, its policing remains largely uncontrolled. It is therefore important for owners of intellectual property rights to be aware of the ease of intellectual property infringement in cyberspace and of committing infringement against other rights-holders, whether innocently or intentionally. This applies to businesses that commission webpage specialists to construct a website as well as those that prefer building their own. Either way, it is important to consider the following issues before your webpage goes live:-

  • Ensure that you warn others of your ownership in the intellectual property rights in the webpage content by displaying a copyright notice either at the bottom of your webpage or which can be retrieved by clicking on a link on your page.
  • If you are displaying any goods that have the benefit of registered trade mark or registered design protection, be sure to use the relevant symbols to warn others that your goods are protected by intellectual property rights. ACID members, of course, can use the powerful ACID logo together with an IP statement, “All intellectual property rights in our designs and products and in the images, text and design of this website are and will remain the property of (insert your name), Any infringement of these rights will be taken seriously”.(see osborne and little; hexahedron design; morgan furniture as examples).
  • Include a set of conditions of use and/or service which sets out clearly the issues of intellectual property ownership, responsibilities and liabilities required of the end-user and/or how you may wish to use any intellectual property created by the end-user, if applicable. You should also specify that the end-user is only granted a limited licence to access and use your website without conferring any rights to modify or download any content without express consent from you.
  • Beware of taking material protected by copyright from other web pages such as texts, photos, specialised fonts or typographical arrangements and using such material on your webpage without prior permission from the rights-owner. As is widely known, it is easy to right-click on your mouse to copy material from another page; but according to IT specialists, there is technology available that can enable copyright owners to identify the source carrying out the infringing act, making it easier and quicker for copyright owners to catch infringers. In turn, you may wish to invest in the same technology to deter potential infringers and include a notice to that effect on your webpage. If you do, a pop-up message may appear after an end-user has right-clicked on copy-protected material to warn the end-user against copying the content without permission. Alternatively, this technology may be covert where the end-user is not forewarned about the potential liability in copying the protected content, but will be directly issued with a cease and desist letter containing a demand for compensation. Businesses must decide which of these methods is of more value to them.
  • If you wish to place links to interesting or relevant articles illustrations or photos on your webpage, you must ensure that permission from the copyright owner is obtained first.
  • It is essential that you register your domain name; this is the address of your webpage. A domain name is an extremely important marketing tool as it identifies your business. You should choose a domain name that best suits your business and should ensure that your domain name registrar (should you decide to use one) conducts the requisite checks to ascertain that the name selected has not previously been registered or may be a trade mark of another company.
  • You should also choose your domain name registrar carefully. Nominet, the internet registry for .uk domain names, provides some general advice on its webpage on how to choose a registrar. To apply for .eu domain names, you should consult the European Registry of Internet Domain Names (EURid) website

Implementing the above points will provide you with some basic defences against infringers and rights-holders. Owners of intellectual property rights will need to balance vigilance in protecting their intellectual property rights with cautiousness against inadvertently infringing the rights of other rights-holders. Don’t forget the ACID legal hotline number is 0845 230 5742 and this is available for initial free advice on contentious and non-contentious matters.

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ACID and ACID Accredited Law Firm DMH Stallard jointly attended 100% Design at London’s Earl’s Court. Having specialist legal support in attendance at the exhibition was an invaluable opportunity for all visitors to discuss many aspects of intellectual property rights via the ongoing one to one design clinics running throughout the show on the ACID stand.   As usual both teams were kept busy throughout the exhibition with numerous enquiries, spanning such subjects as design protection, licensing, franchising, registering designs, use of images, industry agreements etc together with a wide range of questions about intellectual property law and how to maximise and leverage value of IP created within new product design.

100-design-logocomp.jpgThere were a few copying complaints but this did not appear to be a big problem at 100% design and these were dealt with quickly and effectively.

Thankfully, none required any further legal action. Despite ACID’s lobbying of organisers on behalf of members, one of the key areas of complaint throughout the show was still the amount of unauthorised photography. Organisers still did not appear to have real measures in place to police the plethora of visitors photographing new products without permission. Don’t forget images of new products can be around the world in seconds and sometimes copied before exhibitors pack up their stands! ACID will continue to lobby for high profile ACID No Photography signage for next year.   One of the real benefits to exhibitors is access to an IP specialist legal team (whether ACID members or not) both on the ACID stand and roaming around the exhibition, and the availability of instant FREE onsite IP advice. This provides a unique opportunity for a face to face discussion to explore a problem or discuss an issue which members and exhibitors may not otherwise have access to.   

Examples of advice provided included:-

  • advising a sculptor whose designs had been commissioned by a third party but who had failed to enter into any written agreement with the third party as to the ownership of the intellectual property rights in the sculptures;
  • advising a lighting designer on the likelihood of subsistence of design right and copyright in a design for a lamp where the designer had spotted a similar lamp on display at the exhibition;
  • advising design graduates as to the benefits of ensuring that proper procedures were in place prior to exhibiting their designs or discussing confidential designs with potential third parties;
  • advising a furniture designer on the Intellectual Property rights available to them where they suspected that their design had been copied but had not registered any specific rights in relation to the design.

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Decorex celebrated its thirtieth year this September – the best ever – with an announcement that CMP has acquired the exhibition for a sum in excess of 2m. Gary Hughes, Chief Executive of CMP Information, commented, “Decorex is a coveted brand which marks another strong event acquisition for CMP Information.”

CMP’s portfolio also consists of other ACID Accredited exhibitions, Interiors Birmingham, KBB, The National Floor Show, and an interiors event in Abu Dhabi, Interiors UAE.  Andy Braid, CMPi group director said: ‘We are absolutely delighted to welcome Decorex into the CMPi portfolio. We now have a superb, high end interior design show running in London to complement our strong design and interiors brands.’

Long time friend and supporter of ACID, Ian Thompson, Decorex’s Managing Director said,  ‘The entire Decorex team is looking forward to the challenges and opportunities presented by this new partnership in the UK and abroad. I am confident the news will be welcomed by all our exhibitors and the British interior design industry at large.’ Big thanks to ACID members Jan Cavelle Furniture and Allermuir who provided cutting edge and stylish furniture for our stand.  Award winning Hitch Mylius, designers and manufacturers of contemporary handmade products also kindly lent us stools and a table. Huge thanks to all.

Mark Heritage of Hammonds, an ACID Accredited law firm was on hand throughout the show to give one to one specialist IP advice.  Dids Macdonald’s Decorex highlight was spotting an ACID logo on the back of a London bus – thanks to Rebecca Scott’s high profile advertising campaign.  Including the ACID logo on both ads and publicity material really helps get the message out to the end user –  congratulations to Rebecca for exploiting the ACID logo in this way!

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We will be highlighting ACID events and ACID Accredited Exhibitions in 2009 offering FREE advice, support and a high profile brand presence to all exhibitors. ACID Accreditation objectives are to provide a safer trading environment for exhibitors whilst sending a clear warning shot to would-be copyists.

Please email help@acid.uk.com for further information

+44 (0) 845 230 5742

The ACID Legal Hotline, is manned by the ACID team who will provide access to ACID’s new Accredited Law Firm teams, Hammonds, DMH Stallard and McDaniel & Co who will provide members with initial Free specialist advice on each separate issue, giving fast, practical responses to intellectual property protection questions and infringement problems. If a member is unlucky enough to be copied, advice is also given on the practicalities of taking legal action. This initial free advice benefit will normally be sufficient time for the merits of a case to be assessed. Members then have the choice to continue to use ACID’s associate lawyers, at discounted rates or take this advice and instruct their own lawyers. In these instances designers are advised to use lawyers who specialise in intellectual property.

To underpin this, ACID has created an international network of specialist intellectual property lawyers and dedicated Legal Hotlines have been established. This support network is continually being expanded.

In order to maximise your free time you will need to complete our Infringing Purchase Information Sheet. This allows the lawyers to quickly and efficiently asses whether or not there are grounds for a legal complaint.

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