Questions about franchising and the law
In this section, experts answer the questions most commonly asked about the legal requirements and stumbling blocks for franchisors and franchisees.
What exactly is ‘specific know-how’ as far as franchising is concerned?
"Know-how" means a package of non-patented practical information, resulting from experience and testing by the franchisor, which is secret, substantial and identified.
"Secret" means that the know-how, as a body or in the precise configuration and assembly of its components, is not generally known or easily accessible; it is not limited in the narrow sense that each individual component of the know-how should be totally unknown or unobtainable outside the franchisor’s business.
"Substantial" means that the know-how includes information which is of importance for the sale of goods or the provision of services to end users, and in particular for the presentation of goods for sale, the processing of goods in connection with the provision of services, methods of dealing with customers, and administration and financial management: the know-how must be useful for the franchisee by being capable, at the date of conclusion of the agreement, of improving the competitive position of the franchisee, in particular by improving the franchisee’s performance or helping it to enter a new market.
"Identified" means that the know-how must be described in a sufficiently comprehensive manner so as to make it possible to verify that it fulfils the criteria of secrecy and substantiality: the description of the know-how can either be set out in the franchise agreement or in a separate document or recorded in any other appropriate form.