How to protect your intellectual property
“We will always protect the mark,” declares Ken McAllister, CEO of My Salon Suite, when asked about guarding his franchise’s intellectual property. He means trademarks for the company’s name as well as its tag lines.
He describes a straightforward process, which he advises is best handled by experienced attorneys. You file for a registered trademark, which costs about $5,000 all told. Then the important work of policing begins. Franchisees are often his best source of possible infringement cases, as they are in the local markets and see copycats.
McAllister says he will first try a phone call, because sometimes an infringer is unaware. After that he refers the case to his attorneys and they follow up with a cease-and-desist letter.
“If you’ve got a product and you want any protection you have to file for trademarks.” — Ken McAllister, My Salon Suite
Finding a name that can garner such protection in the first place isn’t easy. When starting My Salon Suite about six years ago, which he describes as an upscale beauty complex that houses independent salon owners, he was entering a young marketplace in which competitors had their children’s names in the company name, for example. He wanted a straightforward name that described exactly what the company is, and landed on My Salon Suite.
All of the My Salon Suite complexes across the country have the same look and feel in their public areas, but then each salon owner “adds their own flair,” he says. One of their owners bakes cookies and passes them out to customers, for example. “The industry is very creative, and they all have different looks and feels. It’s like all of our houses are the same, but each room is different.”
McAllister has experiences with another type of IP protection, too—patents, which he holds on 10 or 12 products in the building industry. But he hasn’t filed for a patent on trade dress, one avenue open to business owners who want extra protection for design and other elements at their store. He thinks it’s sufficient to get trademarks and then avidly protect them. And don’t forget the tag lines, in his case: “Fall in love with the suite life,” among others.
Every employee signs
At Vitality Bowls, a chain of fast-casual restaurants serving superfoods, the recipes are ferociously guarded, along with the particular methods used to make them.
Recipes are “our most valuable trade secret at this point,” says Tara Gilad, founder and chief operating officer. “We also blend a certain way, and our competitors haven’t figured it out yet.”
“You have to do everything you possibly can, but it’s never foolproof.” — Tara Gilad, Vitality Bowls
On the advice of their outside attorneys, Vitality Bowls has every employee and every franchisee sign a confidentiality agreement before they start. Then, everything is outlined in the operations manual. “We have all of our recipes clearly there for every single employee and every single franchisee, so we take great strides that everybody is following the correct process.”
So far so good, Gilad says, as no one has yet spilled the beans. “You have to do everything you possibly can, but it’s never foolproof,” she acknowledges. “That’s why we leave everything up to the attorneys, and that’s why we make sure everything is done the right way, so if we did go to court we will prevail.”
Most young franchises can’t afford to have an attorney on staff, but Julie Burleson, CEO of Young Chefs Academy, has two—Kevin Ayers, who serves as vice president and general counsel, and Roger Schmidt, who is president.
That’s because both men are former franchise attorneys and her business partners, brought in two years ago when she overhauled her brand.
Like everyone else at Young Chefs Academy, they all wear many hats, so the two do much more than provide legal advice. But having their counsel has helped her recreate her business the right way.
“It’s invaluable to me because the franchising world is so litigated. There are so many things I can go to them and ask them without having to think, is this worth hiring a lawyer at this point?” she says.
“I’ll ask them questions, or they’ll share stories of other companies that they’ve helped represent so we can learn from their experience on how to avoid any problems in the future.”
Vitality Bowls spends time and treasure to protect its recipes and preparation methods.
She uses an outside firm for trademark, copyright and non-compete work, and she requires all franchisees, employees and franchisees’ employees to sign non-compete agreements.
That came in handy in September, when a franchisee contacted her and said an employee had just quit after two years and started her own cooking school.
“Two weeks later she advertised the same programs that we do, just down the street,” Burleson says. “The first thing I asked her was, please send me a copy of the non-compete and confidentiality agreements we have people sign. She had it, so that made it a lot easier.”
Burleson believes there aren’t enough hours in the day to beat back every competitive challenge. “Every day you come across someone that’s infringing on something you’re doing. So you just do as much as you can on the front end” to protect trademarks, she says, adding “you just kind of have to pick your battles.”
She also believes in playing offense more than relying on defense. “I’m all about creating. Our country was founded on entrepreneurship and competition,” so going after companies “just to keep people from competing with you, that’s not what it’s all about.
“My philosophy here is doing what we do and being the best at it,” and if she gets good legal advice along the way from her business partners, and so is not billed by the hour, what’s not to like?
Living Large follows three emerging brands for an entire year, chronicling their triumphs and challenges as they try to grow. Send comments to email@example.com.