Industrial franchising strategies: some transactional concerns and managerial propositions
by Jean-François Sattin
International Journal of Intellectual Property Management (IJIPM), Vol. 5, No. 1, 2012

Abstract: Even though industrial franchising agreements are common in the licensing world, the way patent and brand licensing interact together in such contracts is an issue that remains unexplored. This article aims to fill this gap by providing a simple model of brand licensing that enables managers to ground their decisions on this topic. More precisely I developed in this article a model that sheds light on the dynamic tradeoffs that arise when the license includes a trademark transfer. I first showed that the difference between the temporal horizons of the partners leads the licensee to under-invest into the brand goodwill, in a way that increases as the term of the contract becomes closer. I then show how this problem can be solved at least partially by properly shaping the agreement. I finally used a licensing database of 553 contracts from the French Institute of Intellectual Property in order to see how the monitoring clauses, the resources transferred and the contract duration interact.

Online publication date: Sun, 11-Mar-2012

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