Can I get compensation for a franchise product I created?
Most franchise agreements have a clause that specifically says that any new product or service developed by a franchisee belongs to the franchisor. It's not uncommon for franchisees to introduce products, and thats why they make it clear that any innovation of their system is theirs to do with as they please. In the case of McDonald's, for example, the Big Mac and the Filet of Fish were both products developed and tested by a franchisee and then expanded systemwide by the company.
Having said that, it is quite common for franchisors to provide recognition and kudos to a franchisee for developing a new product. They may also provide some monetary consideration to offset any direct expenses incurred by the franchisee in the development and testing of the new product. This was the case when I developed a product in a video-rental franchise in the early '80s--the franchisor gave me a ton of recognition and awards for creating the new product and also offset some expenses I had incurred.
But it's almost unheard of in my experience for a franchisor to provide any monetary consideration above this minor level. As an example, I've never heard of a franchisor granting a "royalty" consideration or any other ongoing payment. A good franchisor wants to encourage this sort of innovation, and thats why you might get some awards or recognition. But unless your contract says differently, thats probably going to be all you get.
The real benefit you receive, along with all the other franchisees in your system, is that youll be able to benefit from innovations developed by other franchisees and passed on to you by the franchisor. This is one of the strengths of a good franchise system and it should pay you back in spades over time for the contribution youve made through the product youve developed.
Jeff Elgin has almost 20 years of experience franchising, both as a franchisee and a senior franchise company executive. He's currently the CEO of FranChoice Inc., a company that provides free consulting to consumers looking for a franchise that best meets their needs.