If the intellectual property assignment provisions in the Nothing Bundt Cakes Franchise Agreement are unenforceable, what license does the franchisee grant to the franchisor?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event that such provisions of the Franchise Agreement are found to be invalid or otherwise unenforceable, you and your principals must grant us a worldwide, perpetual, nonexclusive, 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 61–62)
What This Means (2025 FDD)
According to Nothing Bundt Cakes' 2025 Franchise Disclosure Document, if the provisions requiring franchisees to assign intellectual property rights for new concepts or improvements are deemed invalid or unenforceable, the franchisee must grant Nothing Bundt Cakes a specific license. This license allows Nothing Bundt Cakes to use and sublicense the use of the concept, process, or improvement worldwide.
This license is perpetual, meaning it lasts forever, and it is nonexclusive, meaning the franchisee can still use the concept, process, or improvement themselves. Furthermore, the license is fully paid, indicating that Nothing Bundt Cakes does not have to pay any additional fees or royalties to the franchisee for using the concept, process, or improvement.
This provision ensures that even if the assignment of intellectual property rights is not legally enforceable, Nothing Bundt Cakes still retains the right to utilize and share any new concepts or improvements developed by its franchisees, to the extent that the franchisee's rights would be infringed without such a license. This protects Nothing Bundt Cakes' ability to maintain a consistent and evolving brand and system-wide standards.