Franchised Outlets and Stipulations of Proprietary Products and Proprietary Equipment
Often in the world of franchising a franchising company may have a unique business concept and model and in this franchised model there may be few if any products available to help the franchised outlet perform its duties. It is for this reason that many franchising companies established proprietary products and proprietary equipment to help the franchisee get the job done correctly, consistently and to the liking of the consumer of the end product or service.
In my franchising company this was the case and we had to create specialty equipment and some specialty products in order for the franchisees to stay efficient, profitable and consistent with the level of service that a customer had known and come to expect. It is for this reason that I adjusted our franchise agreement and designed a clause to address this issue; you will find it below:
4.5 Proprietary Products and Proprietary Equipment
Proprietary Products and Proprietary Equipment (“Proprietary Products”) are those products and equipment that serve to establish the superior quality of The Company’s Franchise System and for which no substitute is available that is as effective in accomplishing the product’s or equipment’s intended purpose. Franchisor, if offered, or person designated by Franchisor (which may be an affiliate of Franchisor) will sell to the Franchisee any Proprietary Products which Franchisor may hereafter develop or obtain. The sale by Franchisor or such other person of such Proprietary Products or equipment to Franchisee will include a commercially reasonable markup. Franchisee may not become a wholesaler or distributor of Proprietary Products and may not re-sell Proprietary Products, except in connection with the provision of Services by Franchisee.
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All franchising systems are advised to take a look at their franchise agreement and if need be contact a franchising attorney to address this issue in their business model. Proprietary products and proprietary equipment or the mainstay of the franchised outlets so they may compete more efficiently in the marketplace and retain a profit. I hope you will consider this in 2006.
"Lance Winslow" - Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance; http://www.WorldThinkTank.net/wttbbs/
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