Helpful hints to protect your brand
Although you may be eager to explain your franchise and sell it to the world, before you give away your hard-earned secrets, make sure you get paid for the effort you have already put into the franchise.
A common concern when discussing franchises is that the person you are talking to may take the concept and use the idea themselves – with no benefit to you. The best way of sharing business ideas is to get the prospective franchise owner to sign a non-disclosure agreement before you tell them your ideas. Even if the prospective franchise owner does not like the idea of signing such an agreement, if they will not keep your secrets confidential, there is no point in working with them at all. Remember the non-disclosure agree-ment should be presented and signed by the prospective franchise owner before you start discussions and should include obligations that they will not use or pass on information that has a necessary quality of confidence.
A checklist helps you to ensure you have at least thought about the issues, even if you later decide not to raise a particular issue at the meeting. This is a professional approach and gives a good impression to the other side.
This checklist might include the main commercial points, e.g. the issues of payment, timescale, territory and ownership of any rights that exist today and might be produced in the future.
These issues are often overlooked when negotiating a deal and then left to lawyers. It is much cheaper to nail these points early so everyone knows what is expected of them.
Heads of agreement
Once you have agreed the terms of the agreement in principal, write them down and draw up heads of terms. We always advise that if you get the other side to sign the heads of agreement that you mark the document ‘Subject to Contract’.
Remember to agree at the initial meeting a time and place for the next meeting. It is always a good idea to send the prospective franchise owner an agenda of the issues that you want to cover before the subsequent meetings.
Another way of describing due diligence is homework. Try to find out as much as you can about the prospective franchise owner. By using the internet, reading trade magazines and asking friends what they know about the person or company to who you are pitching.
As part of your preparations for any meeting, ensure you know what your message is. Be certain that if you are using examples of work you have done in the past that was commissioned by other clients (third party), that you have an agreement to use their software for demonstration purposes. Many ‘Licensed Developer Agreements’ include a prohibition against exploiting software designed for their machines without it having been agreed in a separate legal agreement.
Never promise something that you cannot deliver. Many franchisors are so eager to sign up a new franchise owner, they are willing to accept uncommercial terms. Read and understand all the contracts and agreements, letters of intent and non-disclosure agreements prior to signing them. If there is something that you do not understand, ask for clarification in writing or ask your lawyer to explain it to you. If the other side cannot explain to your satisfaction the meaning of a clause, ask for it to be removed.
If you are involved in collecting names, email addresses, phones numbers of people or business cards containing personal data, it is advisable you make sure you are entitled to do so. The Data Protection Act 1998 places requirements on you to tell third parties you are collecting their data, why you are collecting it and what you intend to do with it. We suggest you have a look at this website www.dataprotection.gov.uk. Failure to comply with this law can lead to prosecution and a fine.
Trademark rights and protection
You should ensure that the name you have chosen for your new product or company does not infringe the rights of any third party – visit www.patent.gov.uk to check. If it isn’t but you believe it is the kind of mark that third parties may want to copy or emulate, you should consider applying for a registration. In any event, you should use the (TM) symbol on sales and promotional materials. This indicates you are claiming trademark rights in the sign, name or logo and puts third parties on notice that you are using it ‘as a badge of origin’. If you have not registered your main brand as a registered trademark – do it, as it is not expensive.
Written by Bernard Whyatt Brand Protect’s