Research has recently revealed that nearly 100% of UK-based franchisees have recorded profitability in 2016. This is great news for both franchisees and franchisors, but what does it mean for the industry as a whole?
Thanks to phenomenal growth in 2016, franchises face a number of risks in this new year!
Long-term, sustained profitability for franchisees usually leads to franchisors expanding their offering both trademark goods or services provided, but also across geographic or demographic borders.
With that growth comes a number of legal risks for Franchisors. Here's our top three:
When it comes to business, your brand is one of the most important elements to keep control of and one of the most difficult things to define. A brand is both the customer experience, the staff engagement, the service or goods on offer, the tone of voice in marketing, the images used on the website - it is all this and more.
A brand is a pervasive essence of how a business 'feels' to an outsider looking in. Given its power and value, a brand should be protected. The first step in having control can only come from knowledge. As a franchisor, you should know which demographics are using your brand, who is promoting your brand to others and what other brands you are associated with.
Monitor its use, keep an eye on trademark registers and plug into social media to see who is saying what about you. There are many options for doing all these things, but they are never brought together into one suite, until now.
Stephens Scown has launched a unique offering that can watch social media streams, online news outlets, forums and intellectual property office registers. EyeOnline™ is currently in beta. If you'd like to find out more click here.
Register your trademark. Again.
If you've been doing things properly, you'll already own a number of registered trademarks, potentially across a number of jurisdictions, for the goods/services your franchisees offer (both house name, key brands and individual offers are the first areas where protection should be sought).
A good trademark registration will cover not just what you were doing at the time of the application, but also what you are likely to be doing 5 years on from the date of filing. Why? Well, most business' operations evolve and so it would be remiss to seek protection solely for your current offering at the time of application. Given the incredibly powerful right that a registered trademark is, you should also look to prevent others from offering not just identical, but similar goods/services under an identical or similar mark.
As you expand, you'll need to check your trademark portfolio to ensure you have the right protection in place. If you don't, you could end up at the wrong end of an infringement action and all that work could be for nothing. And if you don't have a portfolio, you probably need to speak to us.
Get GDPR Ready
The General Data Protection Regulation (GDPR), which is already in force, comes into full swing in May 2018. After then, any breach of the GDPR could lead to a fine of up to €20,000,000 or 4% of your global turnover, whichever is the higher.
To date, under the Data Protection Act (the old law), the maximum fine has been £400,000 (this amount has been appealed). There is no two ways about it, the GDPR is designed to add some teeth when it comes to enforcement. It's also designed to capture data controllers and processors - and franchisors will likely fall into one, if not both, of these categories.
There's no quick fix to GDPR compliance. For those who can comfortably and confidently say they 100% comply with the Data Protection Act the changes to current policies, plans and procedures should be minimal, but still need to be done as soon as possible in order to let the changes settle in; it may mean a change in business practice.
For those who don't fit into the former category there are two options: carry on and risk the wrath of the new fines, or get compliant. The latter usually involves a data audit and using trace data to evaluate who controls and processes relevant data through a data journey.
The results of a data audit identify where actions are needed to comply, but usually, works to highlight other potential areas for improvement in a business. Click here for more information about our data protection specialism.
For more information or help with any of the issues raised in this article please contact Jess O'Riordan of Stephens Scown LLP on 01392 210700.
Jessica specialises in providing advice on intellectual property and IT law issues which involves negotiating IP agreements and contracts.
She also helps to identify, protect and exploit organisations' intellectual property assets. Her experience includes working with those operating in the food and drink, financial services and IT sectors.
Outside of work Jessica enjoys swimming, cycling, travelling and exploring the Devon and Cornwall coastline and countryside.
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