What rights does Fitstop have regarding modifications to new concepts developed by a franchisee?
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, Fitstop has extensive rights regarding any new concepts, processes, or improvements developed by a franchisee, their employees, or principals related to the operation or promotion of a Fitstop System Business. The franchisee is required to promptly notify Fitstop of any such developments and provide all necessary related information without any compensation. These new concepts automatically become the sole property of Fitstop.
Fitstop becomes the sole owner of all intellectual property rights, including patents, patent applications, trademarks, and copyrights, related to these new concepts. Franchisees and their principals are obligated to assign any rights they may have or acquire in these new concepts to Fitstop. This includes the right for Fitstop to modify the concept, process, or improvement. Franchisees also waive and release all rights of restraint and moral rights to any new concepts they or their employees develop.
Furthermore, franchisees and their principals must assist Fitstop in obtaining and enforcing intellectual property rights to any such concept, process, or improvement in any and all countries. This includes executing and providing all necessary documentation for obtaining and enforcing such rights. Franchisees irrevocably designate and appoint Fitstop as their agent and attorney-in-fact to execute and file any such documentation and to perform all lawful acts to further the prosecution and issuance of patents or other intellectual property rights. In the event that these provisions are found to be invalid or unenforceable, the franchisee grants Fitstop a worldwide, perpetual, non-exclusive, fully-paid license to use and sublicense the use of the concept, process, or improvement.
This arrangement means that while franchisees may innovate and contribute to the Fitstop system, they relinquish all ownership and control over those innovations. Fitstop retains the right to use, modify, and commercialize these innovations as they see fit, without providing additional compensation to the franchisee. This is a significant consideration for prospective franchisees who may have entrepreneurial aspirations and wish to retain ownership of their creative contributions.