How Franchise IP Works in Practice – Who Owns What, and Why It Matters

When people think about franchising, they often focus on the operational side, such as supply chains, training manuals and branded uniforms. But the real value of any franchise system sits higher up the chain, in its intellectual property (IP). Whether it is a logo or a particular way of doing things, the strength and clarity of IP ownership underpins continuity and commercial success for both franchisors and franchisees.

Yet this area is frequently misunderstood or underestimated. We often see questions around ownership confusion, inconsistent licence terms or vague provisions. IP can become the source of significant legal and commercial risk if not handled carefully.

What IP Assets Are at Stake?

Most franchise models include multiple types of IP, whether formally registered or not. These include:

• Trademarks – the name, logo, strapline or slogans that define the business brand
• Copyright works – training manuals, marketing materials, website copy, images and software
• Design rights – packaging, uniforms, branded store layouts
• Patents (where applicable) – for example, in product-based or technology franchises

The franchisor typically retains ownership of all of these rights, granting the franchisee a limited right to use them under a franchise agreement. That agreement is where the control sits, and when drafted well, it can protect brand value while still giving franchisees the operational freedom they need.

Franchise IP Rights & Licensing

A well-drafted franchise agreement will confirm that:

• The franchisor owns the relevant IP
• The franchisee is being granted a time-limited, non-transferable licence to use it
• Use of the IP is conditional on performance, reputation management and quality control

This legal clarity gives franchisors the ability to protect their brand while scaling. It also allows them to take swift action if IP is misused or applied inconsistently across the network.

As your franchise expands, particularly across multiple sites or regions these protections become even more important. A recent mlplaw case study illustrates this in action, where clear terms around IP use helped a franchisor manage consistency and control while granting a franchisee the right to operate in multiple locations. Read the full case study here.

For franchisees, these terms offer confidence that they are operating within defined boundaries, but also raise important questions if they are not properly understood. For example:

• Can the franchisee use adapted or localised branding?
• Are there any third-party materials included that aren’t properly licensed?
• Who owns client data or local marketing content generated during the relationship?

Protecting IP for Franchisees

From a franchisee’s perspective, it’s important to fully understand the limits of what’s being licensed. Risks include:

• Unregistered trademarks – is the brand legally protected in the UK or internationally?
• Ambiguous clauses – vague wording can limit your rights to use materials or develop the business
• Post-termination restrictions – some franchisees only discover their branding is still considered IP long after the agreement ends

Disputes can also arise when franchisees contribute to brand development — for example, by designing regional marketing campaigns or investing in web content, only to find that they have no rights to retain or re-use it.

What Happens When the Franchise Ends?

One of the most contentious points in franchise IP relates to what happens after termination. Most agreements will contain strict provisions requiring the removal of signage, cessation of trading under the brand, and return of all proprietary materials. Franchisees may also face ongoing restrictions through non-compete clauses or confidentiality agreements.

For franchisors, this is about protecting brand value. For franchisees, it can feel like starting from scratch, particularly where the business had developed significant goodwill under the franchisor’s name.

Problems arise when the agreement lacks specificity or when former franchisees push boundaries with “lookalike” businesses that create confusion in the market.

Get Advice Before You Commit

Whether you’re launching a franchise, joining one, or looking to exit, intellectual property should be on your list. In particular, consider seeking advice when:

• Drafting or updating franchise agreements
• Expanding into new markets or territories
• Facing a dispute over branding or marketing materials
• Planning to sell or buy a franchise business

At mlplaw, we support both franchisors and franchisees in managing IP throughout the life of the franchise relationship. This is just one part of our full Franchising Law service. To speak to our Commercial Law team, call 0161 926 9969.