Building a franchise: legally licensing third-party content

A successful business rarely relies entirely on materials developed in-house: its website may come from an agency, its product images from a photographer and its appointment management system from a software provider. If that business is to become a franchise network, legally independent partner businesses must also be entitled to use these resources. The key question is therefore: which rights do you actually hold, and which can you pass on?

1. Take stock of all third-party content and applications

Start with an audit, not a new contract clause. List everything that future franchisees are expected to take over from your existing business that was not developed entirely in-house.

This includes, in particular:

• Photos, videos, graphics and advertising copy;
• Design templates for menus, price lists or advertisements;
• Training materials produced by external specialists;
• Website components, fonts and digital templates;
• Software for tills, bookings, inventory management or customer management.

Create a rights register with a row for each item. Useful columns include creator or provider, contracting party, permitted use, authorised users, licence term, geographical scope and supporting documentation. Also record whether modifications and sharing with franchisees are permitted.

A paid invoice is not evidence of unlimited usage rights. Nor does receiving an editable design file, on its own, establish which changes and uses are permitted. If the original contract is missing, obtain written confirmation of the scope of your rights rather than assuming that years of use amount to comprehensive permission.

2. Distinguish between your own use and use by franchisees

A franchisee is not simply another workstation within your company, but a legally independent business. A licence for your own operation therefore does not automatically cover their use. Equally, permission covering company-owned branches cannot be extended to the franchise network without checking its scope.

Germany has no dedicated franchise act and no general registration requirement under franchise law. Licence agreements are governed principally by the German Civil Code (Bürgerliches Gesetzbuch, or BGB) and the legislation governing the relevant intellectual property right. For photos, text, design and software, the German Copyright Act (Urheberrechtsgesetz, or UrhG) is particularly relevant. Trade mark rights are governed by the German Trade Mark Act (Markengesetz) or, for EU trade marks, the applicable EU legislation.

Under section 31 of the German Copyright Act, rights of use may be granted subject to restrictions on scope, duration and territory. If the types of use are not expressly specified, the purpose of the contract is particularly important. Sections 34 and 35 of the Act must also be considered when transferring rights of use or granting further rights of use. Whether consent is required or an exception applies must be assessed against the specific rights arrangements.

So check not only whether use is permitted, but also:

• May a franchisee publish the material on their own website?
• Are local advertisements, social media and printed marketing materials covered?
• May they change contact details, crop images or alter formats?
• May service providers they engage access the files?

For software, the provider’s contractual terms also apply. A multi-user licence does not necessarily allow multiple businesses to use the application.

3. Agree a suitable licensing model

Several models are available when building a franchise network. Decide which makes operational and commercial sense for each item.

Central licence covering franchisee use: The franchisor expressly agrees with the rights holder that current and future franchisees may use the materials within defined limits. Clarify whether franchisees must be named and how new businesses are added. Wording such as “use throughout the network” should not be accepted without scrutiny: it must be clear who belongs to the network and which uses are covered.

Direct contract with the franchisee: Each franchisee enters into their own contract with the provider. This can make sense for software. Before offering the franchise, clarify the scope of the service, costs and technical requirements. Do not promise a centrally provided application if the franchisee will actually have to purchase it separately.

Replacement with suitable materials: If existing rights are too narrow or commercially unattractive, new content may be the better option. Agree its intended use across the franchise network when commissioning it. Even seemingly freely available materials require checks on licence terms, attribution requirements and any restrictions.

Record additional costs and renewal terms. Otherwise, a licence that can be terminated at short notice for an essential design element could put the network’s entire visual identity at risk.

4. Make rights checks part of day-to-day work

The agreed rights must be reflected in how you work with franchisees. The franchise agreement should clearly describe the permitted uses and their limits. Standard contract terms are generally subject to review under sections 305 onwards of the German Civil Code, which govern standard terms and conditions. Have a suitably qualified legal adviser review liability provisions and unilateral rights to make changes in particular.

Make only approved files available in a central resource library. Include brief usage notes covering permitted channels, allowable modifications, required credits and, where relevant, an expiry date. Archive older versions separately so that materials whose permissions have expired are not accidentally republished.

Also appoint someone to take responsibility for new materials and contract renewals. Before any additional use, check whether existing rights are sufficient. An image licensed for a brochure cannot automatically be used in a new advertising campaign.

Practical takeaway: Before signing your first franchise agreement, create a rights register, expressly clarify use by independent franchisees and release only checked and approved materials. This turns your business’s collection of resources into a package your franchise network can use with confidence.