Sign Support Property

Clause

It is not unusual for franchisors (but also licensors or principals) to provide their franchisees with the sign (s) they will need to use at their point of sale or agency. This supply can be made according to several legal mechanisms.

First, the franchisor can sell the sign to the franchisee. It may also refer a supplier from whom the franchisee must procure. The franchisee then becomes the owner of the brand. In other schemes, the franchisor may retain ownership of the brand and make it available to the franchisee. It can then be a rental, involving the payment of rent. It can also be given as a deposit. In such a case, it should be provided that the franchisee will be able to use the brand submitted for deposit. If necessary, a discount in the form of a loan for use could be considered.

The sign support ownership clause will usefully specify that the franchisor remains the owner of the sign, and specify the terms for making it available.

The legal qualification of the transaction in the clause will be important because it determines the applicable regime and the respective obligations of the parties. These can, if necessary, be arranged.

It is always necessary to be precise about the terms of supply or provision of the sign, which is an essential element and must respect certain characteristics. Since the franchisor remains the owner of the brand, it is therefore imperative that the contract includes a brand support ownership clause, sufficiently precise and detailed.

Such a clause is essential because if nothing is specified, the franchisee will be presumed to be the owner. It will then be necessary for the franchisor to prove the opposite and it will then be more difficult for them to assert their rights over the brand.

However, this status of owner and the rights it implies may be very useful to the franchisor, in particular upon termination of the effects of the franchise agreement or in the event of the opening of collective proceedings against the franchisee. Indeed, in these cases, the franchisor will have more practical possibilities to stop the use of the brand and obtain its return, than if the brand belonged to the franchisee.