What does a Fitstop franchisee waive regarding new concepts their employees develop?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
The Franchise Agreement provides that if you, your employees, or principals develop any new concept, process or improvement in the operation or promotion of any System Business, you will promptly notify us and provide us with all necessary related information, without compensation. Any new concept, process or improvement will become our sole property and we will be the sole owner of all patents, patent applications, trademarks, copyrights and other intellectual property rights related to such new concepts. You and your principals will assign to us any rights you may have or acquire in new concepts you or your employees develop, including the right to modify such concept, process or improvement, and otherwise will waive and/or release all rights of restraint and moral rights to any new concepts you or your employees develop. You and your principals agree to assist us in obtaining and enforcing the intellectual property rights to any such concept, process or improvement in any and all countries and further agree to execute and provide us with all necessary documentation for obtaining and enforcing such rights. You and your principals will irrevocably designate and appoint us as your agent and attorney-in-fact to execute and file any such documentation and to do all other lawful acts to further the prosecution and issuance of patents or other intellectual property rights related to any such concept, process or improvement. In the event that these provisions in the Franchise Agreement are found to be invalid or otherwise unenforceable, you and your principals will grant to us a worldwide, perpetual, non-exclusive, fully-paid license to use and sublicense the use of the concept, process or improvement to the extent such use or sublicense would, absent the Franchise Agreement, directly or indirectly infringe on your rights to the new concepts.
Source: Item 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 38–40)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a franchisee essentially relinquishes all rights to any new concepts, processes, or improvements related to the Fitstop system that they or their employees develop. The Franchise Agreement stipulates that the franchisee must promptly inform Fitstop of any such developments and provide all necessary information without expecting compensation. These new concepts automatically become the sole property of Fitstop.
This means Fitstop will be the sole owner of all associated patents, patent applications, trademarks, copyrights, and other intellectual property rights. The franchisee and their principals must assign any rights they have or may acquire in these new concepts to Fitstop. This includes the right for Fitstop to modify the concept, process, or improvement. Furthermore, the franchisee waives and releases all rights of restraint and moral rights to any new concepts developed by them or their employees.
In practical terms, this clause incentivizes franchisees and their employees to innovate for the benefit of the Fitstop system, but it also means they will not receive direct financial or proprietary benefit from those innovations. Fitstop retains full control and ownership of any improvements, which it can then implement across the entire franchise network. This is a fairly standard practice in franchising, as it allows the franchisor to maintain consistency and control over the brand and system while leveraging the collective creativity of its franchisees.
In the event that these provisions are found to be invalid or unenforceable, the franchisee and their principals will grant Fitstop a worldwide, perpetual, non-exclusive, fully-paid license to use and sublicense the use of the concept, process, or improvement. This ensures that Fitstop can still utilize the innovation even if the original ownership clause is challenged. The franchisee also agrees to assist Fitstop in obtaining and enforcing intellectual property rights to any such concept, process, or improvement in any and all countries and further agrees to execute and provide all necessary documentation for obtaining and enforcing such rights.