Does Bor Restoration have the right to disapprove of an Innovation created by a franchisee?
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, Bor Restoration retains the sole and exclusive right to either approve or disapprove any innovation created by a franchisee, and can do so for any reason or no reason. If Bor Restoration approves the innovation, they may allow the franchisee who created it to use it, and may also permit other franchisees or company-owned stores to use it as well.
Bor Restoration maintains ownership of any innovation created by a franchisee. The franchisee agrees to take necessary actions to ensure Bor Restoration obtains the rights to the innovation, provided it doesn't cost the franchisee anything. The innovation will be considered a "work-made-for-hire," and the franchisee assigns all rights to Bor Restoration. If any rights cannot be automatically assigned, the franchisee grants Bor Restoration an exclusive, royalty-free, transferable, irrevocable, worldwide license to use, reproduce, distribute, and modify the innovation.
Bor Restoration is not obligated to compensate the franchisee for the innovation, but they reserve the right to do so without incurring any obligation to pay for future innovations. This means that while a franchisee might come up with a valuable improvement to the Bor Restoration system, Bor Restoration has complete control over its use and ownership, and the franchisee has no guarantee of benefiting financially from it.
This clause highlights the importance of understanding the intellectual property terms in the franchise agreement. While franchisees may be encouraged to innovate, they must recognize that any such innovation becomes the property of Bor Restoration, potentially without any direct compensation or control over its use. Prospective franchisees should carefully consider these terms and discuss them with a legal advisor to fully understand their implications.