Business owners often ask me how to #grow their businesses. While many experts can weigh in, from my perspective the most important step is to secure rights in the intellectual property that identifies or supports the business.
There are many ways to grow a business. Some common ways include the owner financing new locations or #franchising /licensing that right to third parties. Protecting your brand is important in either situation.
This week I read a story that demonstrated how important securing your brand can be. Hofbrauhaus of America Franchise (HOA) franchised the right to third parties to start Hofbräuhaus German restaurants throughout the country. Before forming this franchise system, HOA registered many brands used by the business, including seeking copyright in the architectural design of the building.
One franchised store was located in Belleville, Illinois. The owner of this location stopped making payments to HOA. HOA attempted to negotiate this payment dispute, but eventually moved to close this location.
The suit between HOA and this owner of course mentions the failure to pay. I enjoyed the list of other franchise agreement failures, including:
-not maintaining the required operating hours;
-not conforming to the menu template;
-not employing an approved German- or Austrian- style band; and (worst of all)
-serving domestic beer!
The court appointed a receiver for the location. The receiver has begun the step that the public perceives as the end: the de-branding of the restaurant.
The restaurant is just another German style restaurant without the name Hofbräuhaus and the unique building shape. Hire a band? Not unique. Serve Weiner Schnitzel? Expected. The branding made it unique, and taking the branding away was the true power. Brand protection supplied this power.