If a Bor Restoration franchisee creates an Innovation, who owns the rights to it?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
the nature of the Innovation. We have the sole and exclusive right to approve or disapprove of any such Innovation for any reason or no reason. If we approve of it, we may permit you to use the Innovation and may, in our sole and exclusive option, permit any one or more franchisees or company-owned stores to use any portion of the Innovation.
- b. You agree that as between us, we will own the right, title, and interest to the Innovation. You agree to take any action necessary to ensure that we obtain such right, title, and interest so long as such action costs you nothing. To the extent such ideas, concepts, techniques, or materials comprise items that may be copyrightable or patentable, the Innovation will be a "work-made-for-hire." To the extent the Innovation is not deemed a work-made-for-hire, you expressly assign us all exclusive right, title, and interest in and to any portions of the Innovation without further consideration, restrictions, liens, or encumbrances. To the extent any of the rights in and to any Innovation cannot be automatically assigned to us due to Applicable Laws, you grant us an exclusive, royalty-free, transferable, irrevocable, worldwide license (with rights to sublicense) to the non-assignable rights, including the right to use, reproduce, distribute, and modify the Innovation. No rights of any kind in or to an Innovation are reserved to or by you, and none will revert to or be reserved by or on your behalf.
- c. We are not obligated to pay you for the Innovation, though we reserve the right to do so without incurring the obligation to pay you or any other franchisee for any future Innovation.
Source: Item 23 — Receipts (FDD pages 40–202)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, any innovation created by a franchisee becomes the property of the franchisor, BOR Franchising, LLC. The franchisor has the sole right to approve or disapprove any innovation for any reason. If Bor Restoration approves the innovation, it may allow the franchisee who created it, or other franchisees, to use it.
The agreement specifies that BOR Franchising, LLC will own all rights, title, and interest to the innovation. The franchisee must take necessary actions to ensure the franchisor obtains these rights, provided it doesn't cost the franchisee anything. The innovation will be considered a "work-made-for-hire" if it involves copyrightable or patentable material. If it's not deemed a work-made-for-hire, the franchisee assigns all rights to BOR Franchising, LLC without any further compensation or restrictions.
Furthermore, if any rights to the innovation cannot be automatically assigned to Bor Restoration due to applicable laws, the franchisee grants the franchisor an exclusive, royalty-free, transferable, irrevocable, worldwide license to use, reproduce, distribute, and modify the innovation, including the right to sublicense it. The franchisee retains no rights to the innovation.
Bor Restoration is not obligated to compensate the franchisee for the innovation but reserves the right to do so without creating any obligation to pay for future innovations. This arrangement is not uncommon in franchising, where franchisors often seek to control and benefit from system-wide improvements, but franchisees should be aware that they may not receive direct compensation or retain rights to innovations they develop.