If a Fitstop franchisee's employee develops a new concept, process, or improvement, does the franchisee receive compensation?
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, if a franchisee, their employees, or principals develop any new concept, process, or improvement related to the Fitstop system, they must promptly notify Fitstop and provide all necessary information. However, they will not receive any compensation for it. The new concept, process, or improvement becomes Fitstop's sole property, and Fitstop will own all related intellectual property rights, including patents, trademarks, and copyrights.
This means that as a Fitstop franchisee, you and your employees are obligated to disclose any innovations to Fitstop without expecting payment. You and your principals must also assign any rights you have or may acquire in these new concepts to Fitstop, including the right to modify them. Additionally, you waive all rights of restraint and moral rights to any new concepts developed by you or your employees. You also agree to assist Fitstop in securing and enforcing intellectual property rights to these concepts in all countries and provide all necessary documentation.
Fitstop is also irrevocably designated as the agent and attorney-in-fact to execute and file any documentation to further the prosecution and issuance of patents or other intellectual property rights related to any new concept, process, or improvement. If these provisions are found invalid, the franchisee and their principals will grant Fitstop a worldwide, perpetual, non-exclusive, fully-paid license to use and sublicense the concept, process, or improvement. This ensures Fitstop can continue using the innovation even if the original agreement is unenforceable.
This clause is fairly common in franchising, as franchisors want to maintain control over their brand and system standards. However, it is important for prospective Fitstop franchisees to understand that any innovations developed within their business become the property of Fitstop without compensation. Franchisees should consider this when evaluating the potential benefits and risks of investing in a Fitstop franchise.