Local News

May 20, 2014

Intellectual Property (IP) Matters:
Owning or Creating a Franchise in Trinidad and Tobago

by Regan Asgarali


Anyone who does not know the saying that “you can tell where a town is in Trinidad when you see a KFC”, either isn’t Trini, or has been living under a rock for some time! KFC is indeed one of the most popular and widespread franchises in our country. One must not think, however, that only restaurants can be franchises, as just about any type of commercial activity can be franchised. According to Entrepreneur Magazine, the US-based Jani-King stands alone “as the world’s largest commercial cleaning franchise company, with over 7,700 franchise owners and 100 regional support centers in 14 countries around the world.”

Trinidad and Tobago has some of America’s leading restaurant and eatery franchises inclusive of Pizza Hut Inc., Subway, KFC Corp., Domino’s Pizza Inc., Popeye’s Chicken and Biscuits, Church’s Chicken, The Haagen-Dazs Shoppe Co. Inc., Cold Stone Creamery, Marble Slab Creamery Inc. just to name a few. There are however many stellar local franchises which lead the way for our manufacturing thrust not only here but in the region as well. One can just think of what Rituals has become to us as a people. Rituals stores are places where from business execs to young professionals and students converge to wind down or to begin the conversation on the next big idea. Mario’s Pizzeria and Joes are two leading local restaurant chains as well. There are countless opportunities for prospective franchisees in our country and this area of commercial activity should be seen as a viable career option. The real challenge however is to get some of our own entrepreneurs to take the giant step and become franchisors themselves and to spread our local business ideas, way of cooking etc. to beyond our shores.

FranchiseIn a nutshell, franchising is a business relationship in which the business owner (the franchisor) licenses to independent persons (the franchisee) the right to distribute the franchisor’s goods or services, and to use the franchisor’s business name or trademarks for a fixed period of time. Effective management of intellectual property is at the heart of every successful franchise, be it the trade secret for recipes, or the utilization of trademarks, copyright and design rights.

Franchising has often been called a ‘commercial marriage’ as it involves a close and unique relationship between franchisor and franchisee. The franchisor is able to expand its market presence without using its own resources in most instances, and the franchisee gains access to an established business system, generally at lower risk, for its own commercial advantage.

Many excellent local businesses would be successful franchises if this model were explored. Start up franchisors should however provide some protection to their franchisees in relation to the territory they intend to permit the franchise to operate in. This is essentially means that the franchisor should give exclusive rights to the franchisee in relation to an entire country or parts of a country.

It is of critical importance to clearly define the intellectual property (IP) boundaries in a franchising agreement. For instance, intellectual property may mean trademarks, which is any sign used by a manufacturer which is capable of distinguishing goods from those of others. Most franchisors apply for registered trademarks for their business name as this is a powerful method to prevent unauthorized use of their name by third parties. IP might also refer to trade names, or the names under which the franchisor sells the products.  IP includes logos, designs, slogans, know-how, information, drawings, plans, patents and other identifying materials whether or not  registered or capable of registration and all other proprietary rights owned by or available to the franchisor for use in connection with the manufacture, assembly and sale of its products, methods and systems.  The Intellectual Property Office of Trinidad and Tobago is the organization responsible for the examination and grant of trademarks and other intellectual property.

An interesting point to note is that many franchises, particularly in the food business, have been able to exist for so long because of their trade secrets. Any confidential business information which provides an enterprise with a competitive edge may be considered a trade secret.  Colonel Sander’s eleven secret herbs and spices immediately come to mind. Indeed, no single KFC Inc. executive can see the whole recipe, and the handwritten sheet of paper, signed by Sanders himself, is kept in a vault under tight security. This is what our local businesses must strive to be like if they are to achieve Angostura Bitters-like status for their trade secrets! A good confidentiality clause in the franchise agreement can help prevent abuse.

There are countless opportunities for prospective franchisees in our country and this area of commercial activity should be seen as a viable career option. The real challenge is to get some of our own entrepreneurs to take the giant step and become franchisors themselves and to spread our local business ideas, way of cooking etc. to beyond our shores.  The revenue that could be generated from a well-founded, well-managed Trinidad & Tobago franchise/ brand could be limitless. One can just look at what the United Arab Emirates has done in transforming its oil dollars into record-breaking income in tourism. Why not invest in the successful Sandals Resort Franchise for Tobago and the northeast coast of Trinidad?  The potential is there and franchising is a viable option to accomplish it while diversifying and growing the economy.