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What Franchises Should Know About Compliance from a Burger Lawsuit

December 19, 2017
Food & Beverage
What Franchises Should Know About Compliance from a Burger Lawsuit

What do burgers, coffee, and brand compliance have in common?

In one of the great legal court battles of our time, In-N-Out Burger filed a trademark infringement lawsuit against Smashburger earlier this year. The reason? In-N-Out claimed their fast-food rival’s “Smashburger Triple Double” was too similar to its own “Double-Double” burger.

If you’re not familiar with these fast-food delicacies, Smashburger’s Triple Double features two burger patties and three slices of cheese. In-N-Out Burger’s Double-Double also features two burger patties, but with two slices of cheese.

The real difference here is In-N-Out’s long history (beginning in the 1960s) of ensuring brand protection, with registered trademarks for the name “DOUBLE-DOUBLE” among other branded properties. Smashburger was accused of trademark infringement and dilution of its trademarks as well as unfair competition, as In-N-Out sought an injunction and compensation.

According to the Orange County Register, the company has “a reputation for fiercely protecting its brand from copycats. In the past, they have sued restaurants for using similar decor, uniforms and logos — which are all protected under the company’s trademark portfolio.” This includes a lawsuit against Grab-N-Go for serving a “Wild Style Burger” that bared similarities to In-N-Out’s “Animal-style” burgers.

Not a Problem Reserved for the Burger World

In early 2016, Starbucks lodged a similar trademark lawsuit, accusing a Canadian chain restaurant operator of ripping off its Frappuccino brand with a drink called the “Freddoccino.”

“The Freddoccino mark is similar to Starbucks’ famous Frappuccino mark in appearance, sound, and connotation: both begin with FR–, contain four syllables, end with –CCINO, and evoke a European-inspired cold coffee beverage,” the complaint says.

The suit also claims the Freddoccino is sold in highly-similar looking clear cups, bearing similarly located labels, with similar whipped cream and syrup drizzle on top.

A Clear Lesson (and Warning) for Franchise Owners

There’s a clear lesson here for the nearly 800,000 franchise locations operating in the US.

To avoid future litigation like this, ensure any and all offers that may be promoted by your local stores are approved by corporate franchise headquarters.

This rule should apply to all assets that are intended to represent your brand, such as printed brochures, social posts, email copy, presentations and direct mail items. Creative promotions for your franchises have the potential of boosting sales – but without the right process in place, they could threaten your business with a copyright or trademark infringement lawsuit.

This is an expensive consequence for growing companies, one that also threatens brand reputation and market perception, impacting sales and stock price if you’re publicly traded.

What’s more, the lingering effects of non-approved assets or promotions can be just as damaging to the customer experience. When customers interact with fragmented content assets that don’t fit brand design standards, or contain out-of-date or inaccurate information, their perception of your organization as a whole suffers.

Our study found that fragmented content meets buyers’ needs only 15% of the time, and its ability to impact revenue generation is diminished.

How to Enforce Brand Compliance

But, franchise brand compliance isn’t easy.

With so many marketing channels available (the average company uses 8) the risk for fragmented content and non-compliance looms greater than ever. This problem multiples in complexity when organizations are spread across geographic regions or throughout hundreds of franchise locations.

For franchises to both avoid the risk of litigation while improving the effectiveness of their promotions, we recommend:

  • Centralizing your assets.
    One major reason why employees use non-approved access is because they’re simply too difficult to find. It can seem faster, and easier (in their perspective) to “go rogue” and create their own.Many franchise organizations choose instead to centralize approved content within a Marketing Asset Management system, allowing employees to quickly find marketing assets that have gone through authorization. This decision helps all customer-facing team members, including franchises, corporate employees, and agencies.
  • Create a clear approval process.
    To avoid litigation situations like Smashburger and the makers of the Freddoccino, make sure only approved promotions are made available to your teams.Look for standards related to design, message consistency, timeliness, any industry compliance you’re held to, and of course, possible legal threats like trademark infringement. A lack of formal standards is one of the top causes of content fragmentation, according to research from Demand Metric and MarcomCentral.
  • Allow room for customization.
    Though locking up assets is important to protecting the brand, franchises still need a way to customize materials to suit their local communities and customer preferences.Give your organization’s brand stewards the ability to personalize branded assets using template-based customization. Lock certain areas (such as that under compliance governance or brand standards), but allow for flexible updates on fields such as date or location.Whether applied to print, or digital assets, allowing customization improves the relevance of your franchise locations’ efforts, making them far more effective.

A Great Example of Franchise Brand Compliance

At Long John Silver’s, a US based fast food and seafood restaurant chain, their centralized marketing communications team wanted to improve local store marketing efforts while protecting their brand from non-compliant materials and brand inconsistency.

But, most franchisees were not trained marketers. Designs were made on-the-fly (introducing risk to brand consistency) and print and creative vendors were driving up costs. Plus, time spent marketing took franchisees’ time away from their businesses – and corporate profits.

So, the company established a streamlined and centralized system to ensure brand compliance. This one-stop-shop for all franchise needs became their go-to marketing hub for operations, creative, and franchisees, housing and supporting all communications storage, distribution, fulfillment, and collaboration.

Nearly 2,000 franchisees, corporate employees, and agencies can now customize pieces based on local events, and respond immediately to local market conditions.

Whether selling burgers, coffee drinks, or enterprise software, all brands should take care to make it as easy as possible for their employees to use only approved, compliant, and on-brand promotional assets. Doing so not only reduces risk of litigation, it radically improves the performance of your marketing efforts.