Summary: Dorsey partner Gary Duvall discussed in Franchising World magazine the revenue potential of merchandizing and licensing for franchisors and franchisees. Merchandizing generally refers to trademark licensing of branded goods, while licensing often refers to licensing of technology, including copyrights, trade secrets and patents.
Duvall recommends four practical tips for franchises considering such strategies. First, franchisors should avoid conflicts with franchisees by ensuring that licensing is complementary to the franchise relationship, and that the official franchise agreement permits licensing. Second, licensors need to control the quality of a licensee's goods or services, by inspections and other processes. Third, licensors should always include quality control provisions in the written license agreement itself. Finally, licensors are urged to keep records of all quality control efforts, and to terminate the license if the licensee does not meet the specified quality standards.
"Developing and Licensing Technology: Another Source of Revenue" was published by Franchising World magazine, April 2008.