Intellectual Property refers to trademarks, designs, copyrighted works, and even pieces of art. It is best to know who owns what ideas and who holds the rights to these particular ideas before purchasing any business.
For some businesses, like franchises, finding information on Intellectual Property Status is rather uncomplicated. Most marketing materials and promotional goods are within the rights of the franchise business to use, though it is always a good idea to talk to the parent corporation to learn what comes under the umbrella of Intellectual Property Status, and if the franchise branches have the right to use the trademarks and copyrighted slogans of the corporation that owns them.
For non-franchise businesses, from a local sandwich shop to a neighborhood fitness center, it is necessary to perform due diligence to find out whether everything the business uses as intellectual property is within their right to use. In simple terms, it must be determined that the small business has secured the right to use what might be construed as someone else’s intellectual property, whether it be advertising and promotional materials, software and computer programs, copyrighted and trademarked images, logos, or trade secrets.
If the business has not taken these steps, it is still possible that the company will be a profitable purchase, but it is first necessary to secure intellectual property rights either as soon as ownership transfers, or even before, by requesting that the current owner take these steps.
