This is a chilling reminder to all franchisors of their duty to protect the brand. In the Dunkin’ Donuts’ case, the franchisor claimed that it was competition from another brand that hurt their system. But the court showed that the franchisees had alerted Dunkin’ Donuts of the competition back in 1996 and asked for some sort of plan to respond to the effect the new competitor was having on their sales. Unfortunately, Dunkin’ Donuts did nothing to try to counter the negative effect this new competition was having on its franchisees.
This is just one example of how a franchisor can fail to protect the brand. The franchisor needs to be constantly aware of its brand and protecting that brand in the market. Some of the areas the franchisor needs to monitor to protect its brand are as follows:
- Make sure that franchisees are using the brand only as directed by the franchise agreement and operations manual. Franchisees that do not follow the system and operate under the brand name can effectively hurt other franchisees.
- Monitor the use of the trademark to ensure that others are not using the marks or marks that are significantly similar to the franchisor’s mark. This can dilute the marks, cause confusion in the market and ultimately hurt the value of the brand.
- Monitor competition with the brand and come up with ways to counteract the effects of competition on the brand. (This is the Dunkin’ Donuts example.)
- Review the brand to ensure that the brand is current for the marketplace. This may mean updating the brand so that it appears fresh and continues to draw old and new customers.
Thanks for your suggestion. I must say that franchisee is the business that really gives many opportunity for growing the business.
ReplyDeleteadvantages and disadvantages of a franchise business
The brand is one of the most important images for the whole company or product since it symbolizes how big its reputation in holding their customers. In the franchisee’s point of view, keeping a well-known brand untarnished for the local customers is indeed a huge responsibility. So the franchisees have the duty of leading and assisting in protecting the brand which is part of abiding to the franchising guidelines.
ReplyDeleteLonnie Lisa
Brand Identification symbolizes the organization and thus it should be different and must indicate the enterprise of the business. By the way, the concepts about franchiser needs to observe to secure its product are really cool to read and they can be very useful specially to business owner.
ReplyDeletewhat are the advantages of franchising
This is a terrible experience. I know the contract doesn’t talk about buying and selling the café or store, but I think it’s unethical to sell your café when you’re still the franchisee. I guess they just made a mistake that time and I know they’ll take responsibility for their actions. I hope things are okay by now and you already have a new business venture. :)
ReplyDelete- Clint Shaff -
Franchisor will built successful business system. The aim of franchisor is the same like other business owner to increase the reputation of business and protect the brand.
ReplyDeletefranchises for sale