What should a franchisee look for in the intellectual property (IP) of a franchisor? It is a sign of a good franchisor if the IP it offers up is comprehensive, complete and the whole package is neat. Compare it to looking to buy property: good fences, fresh paint and a neat garden tend to show that a property has been well maintained. This gives buyers confidence that they are likely to have found a good buy and that a deeper, or qualified, inspection will show the whole structure and foundation are sound.

So what should a good IP portfolio look like?
The intellectual property should be consistent with the franchise itself so the main elements, or main character which attracted you to investigate the franchise in the first place, should be showing up as registered trade marks eg the name and the logo. Also the look and feel should either be registered trade marks, or recognised as common law trade marks, or described as a part of the livery, or style, of the business.

Supporting these trade marks should be manuals that include rules of use of the trade marks and style, or a trade mark style guide, setting out how they should and should not be used. Within these manuals you might find further details about aspects of the look and feel beyond the registered trade marks.

What else apart from trade marks can a potential franchisee expect to find?
The franchise system should have manuals in which all the secrets of the business are revealed. A good franchisor will have documented the key elements of the business, so that they can be replicated readily; this is the essence of a good franchise system. It should on reading provide an ‘ah ha’ moment, or series of such moments, so that you feel when reading the manual that you understand the essentials of the business.

The better manuals are written in simple language and drill down to the essence of what makes this franchise different from others, in other words the unique business proposition. If it is hard for you to understand, it may well also be hard for others and for the market to accept, and his is not likely to be a good sign.

So look for a simply written book of page-turning secrets in which you discover exactly how the business is run.

What can a franchisee expect during the term of the franchise?
Franchisees should expect support for the current branding and at times an investment in future branding, given changing market trends.
 
The franchisor and franchisee may have different and potentially conflicting interests about long-term branding. A recent case in point was reported in the US August edition of Bloomberg Business Week. In this case Yum BrandÍs (KFC) promotion of grilled chicken (a long-term franchisor branding strategy for a healthier product) was claimed to be causing immediate or short-term loss to existing franchisees (compared with the customer’s expectation of fried chicken).

Ideally, a franchisee should see that the franchisor branding, the franchisee’s own attitudes and current market opportunities all align.

Raynia Theodore was assisted by Marianne Dunham of Mason Sier Turnbull in writing this article. Raynia can be contacted at raynia.theodore@mst.com.au and Marianne can be contacted at marianne.dunham@mst.com.au.