In this article on brand protection, I am sharing an example that unfortunately happens all too often, even today! I am referring to Franchisees, licensees, or just opportunists using the unauthorized intellectual property of a highly successful brand to enrich themselves, while avoiding the payment of royalties, new store opening fees, initial franchisee fees, and other costs. During a Midwest market tour, we drove by a convenience store/gas station with a highly recognizable baked goods brand on the pylon sign. We pulled in to get a snack. Upon entering this store, we observed the following branded items, which were nearly identical to the global brands logo: bakery boxes, coffee cups, bakery item reach in, napkins, straws. The logo and products included the exact same colors, font, and size/shape of this brand. The only discerning difference was the second word in the logo was changed to match the first word. We later learned the items were being manufactured for use in television and movies.
A few days later, we followed the box truck who delivered the product to this “knock off” store back to a single store operator of this brand. We knew we had a good case of trademark infringement, and under-reporting of sales, when we noticed three delivery box trucks behind this single store operator. Following several weeks of surveillance and a royalty audit of this franchisee, we identified 18 unauthorized locations being serviced by this operator including convenience stores, hotels for their continental breakfast, and other businesses.
The franchisee was shocked when we shared with them the volume of video showing the owner and family members personally delivering product to these 18 locations on a nightly basis. In addition to no longer being a franchisee of this brand, thanks to their great production, inventory, and delivery records, we were able to reconstruct lost revenue, damages, and audit costs.
The value of a brand’s equity cannot be underestimated. It’s not cute, or funny when we see these, and the worlds most loved and respected brands relentlessly monitor and look to resolve these cases, as they realize their responsibility to the consumer and to the franchisees who have bought into the brand. At IntelliShop, we are proud that our work helps protect our clients’ brands. $
