In many new franchise systems, the most important element of the brand is the common name under which each franchised outlet operates. If you are considering expanding your business by opening additional locations or franchising, before you get too far into the process, consult with trademark counsel to be certain you have a name that can be registered as a trademark with the United States Patent and Trademark Office.
Generic and descriptive names, like “The Restaurant” cannot be registered or protected, nor can names that are similar to other, previously registered trademarks. If it turns out your name cannot be registered, you will have to find another name. We have seen people try to do that overnight, but inevitably, they change their mind several times.
Picking the Right Name
Usually entrepreneurs looking to expand or franchise their brand already have a well-known brand, at least locally. Often before franchising, trademark counsel may conduct a preliminary trademark search to determine whether the name can be used outside a local area. Sometimes, the results of the trademark search require the entrepreneur to go back to the drawing board for a new name and logo. Either way, having the right name and logo is critical to attracting consumer demand—which will also attract franchisees to buy into the system.
For any business, we also suggest that the entrepreneur register a top-level .com domain name as close to the name of the business as possible. For a business looking to franchise beyond its home state, this may require the franchisor to register a new .com domain name dropping any state or city names or abbreviations or other local identifiers that are used in its current domain name.
Benefits of Registering Your Trademark
Once you know your business name can be registered, and does not infringe on others, you need to register that name with the United States Patent and Trademark Office. The registration process can take a year or more, but there are several very important reasons to start the process as soon as you are even considering expanding or franchising your business:
- First, in order to protect that name, you will need to have it registered, and the protection afforded a registered name dates back to the date you first apply for registration. Therefore, the sooner you file, the lower the risk that someone else will file to register the name before you do.
- Second, until your name achieves registration, you will have to disclose to prospective franchisees that the name has not been registered, and therefore cannot be protected to the same extent as a registered mark. That is obviously an impediment to convincing prospective franchisees to invest in your franchise. Franchisees will take comfort in knowing that its franchisor has registered the mark and therefore may not be as likely to require its franchisees to change their signs and branding if the mark is later challenged by a third party.
- Third, until you have a registered mark, there are nearly a dozen states with business opportunity laws that will require you to prepare additional disclosure documents, and jump through additional hoops, before you can offer franchises in their state. Once your mark is registered, that extra work becomes unnecessary. Thus, obtaining a federal registration of your name saves you money and delays in going into a number of states.