Archive for December, 2011

Restaurant Woes in the Down Economy Increase Franchise Litigation

Franchisee-franchisor relations are getting tense in the down economy. Several companies such as Wendy’s, Burger King, and Quiznos have been in the headlines because of franchisee unrest, including charges of racketeering and corruption and complaints about food costs, supplies, and the use of marketing and advertising funds.

“When your profits are gone, the first place you look is to see who is taking the most money off you,” said Kevin Tackett, the president of the Quiznos Franchisee Association (QZFA).

With less people going to restaurants, franchisees start to look around the store for answers. Is it new food that is cutting into profits, forced advertising campaigns, or upgrade costs, for example? When a franchisee feels that their part of the franchise agreement is not being upheld, they should present their concerns to a franchise attorney, allow him or her to review the terms of their agreement, advise on those terms and potentially seek to initiate negotiations or litigation against the franchisor. Resolving a franchise dispute quickly is essential to making sure the business can run smoothly and be profitable.

Wendy’s recently settled with its largest franchisee, the WendPartners Franchise Group, after it wanted stores to install new toasters for an up-and-coming cheeseburger that would increase sales by more than two percent. Big costs like new toasters across many stores can be tough when profits are not as plentiful as they were in the past.

Burger King settled a lawsuit with its franchisees in the spring after store owners were required to sell a double cheeseburger for $1 as part of a promotion. Franchisees said they were losing at least a dime per sandwich, and when you add it up, it hurt their bottom line. The Burger King National Franchisee Association says the settlement has been a positive step that allows franchisees to have more input in future promotions. The restaurant is also hoping that a menu makeover will also drive more profits to the franchisees.

Quiznos survived a slew of franchisee lawsuits back in 2009 too. Franchisees were in disputes over royalties, marketing funds, and food and supply issues. The QZFA seeks to work with Quiznos Corporate in an open way so that business decisions are more transparent and profit concerns are addressed more efficiently.

And even over at KFC, the franchisee-led KFC National Council and Advertising Cooperative (NCAC) won a recent battle against the corporate office over advertising. Advertising strategies and promotional dates should be a discussion between both sides to have the most impact.

In the end, franchisees are wise to have a franchise lawyer on speed dial and open lines of communication with their fellow stores. The downturn in the economy is too severe to go it alone against the corporate office.

Anthony Spotora is a Los Angeles business lawyer, Los Angeles franchise lawyer, and Los Angeles business litigation attorney. To learn more, visit Spotoralaw.com.

Logos Are Important Business Assets to Trademark As Noted In Recent Court Case

Logos are one of the cornerstones to a business’ sales and marketing identity. It can be as essential as the business itself for a brand’s identity to clients and the public. Logos that are not thought out or resemble other well-known logos may not only appear amateurish to the audiences the business is trying to attract but may further be committing infringement. An individual or a business can protect an original logo, provided it has proof of authorship via the U.S. Copyright Office and/or by registering for trademark protection through the United States Patent & Trademark Office.

Original authorship on websites, business slogans, and even innovative marketing campaigns are critical to protect. A skilled intellectual property attorney can help you acquire and protect these coveted assets that mean so much to your business. Otherwise, these parts of your business could be jeopardized because you did not get adequate protection. It is worth the time and investment to have an experienced attorney help you with these steps.

It is important to note that if you are the first to use a name, logo, or slogan in a geographic area, then you might have gained some common law rights and have a ‘first use’ argument. You have the right to initiate a lawsuit should someone infringe on these business assets, but they are limited without registration. So if you want to protect these assets on a national or international level, you must register and trademark them.

In a recent intellectual property suit, graphic designer Bill Dawson was shocked to find that a logo design he created for an independent film company was on the big screen, when months before the company had expressed no interest in his designs. This issue started when the designer saw his logo at the end of the Conan the Barbarian movie, but then he noticed it was in several Millennium films, including Elephant White, Trespass and Puncture, and that it was also on Millennium’s website. Dawson is claiming at least $200,000 in damages for copyright infringement and breach of contract for unauthorized use of his work.

Originally, Dawson had been contacted by Technicolor, a technical production services company to create a logo for Millennium Films for a small fee. Dawson, as the head of the graphic studio XK9, says that he had a verbal contract with a Technicolor agent. But when Millennium did not show any signs of interest in the designs, no further compensation was pursued.

That there seems to be a missing gap of information between Dawson, Technicolor, and Millennium in this exchange will make for a very interesting court case. Perhaps the court case will show what the agreement, if any, was between Technicolor and Millennium. Regardless, the lack of written terms will likely weigh in Dawson’s favor under copyright laws. As the rightful owner of the designs, he is seeking $200,000 in damages and wants any products, advertising, and marketing collateral with the unauthorized logo to be given back to him.

Anthony Spotora is a Los Angeles intellectual property lawyer, Los Angeles entertainment lawyer, and Los Angeles business litigation attorney. To learn more, visit Spotoralaw.com.