One of the most important parts of a franchise system is the brand and trademark that is licensed by the franchisor to the franchisees in exchange for fees, and under which the franchisees operate their franchised outlets. The brand name must attract customers, but it also must be one you can prevent competitors from using. The name must be unique.
- Larkin Hoffman’s intellectual property attorneys can help you find and/or federally register a name that is strong from both a legal and branding standpoint.
- If you are already using a brand name for your business that you would like to continue using for the franchised outlets, we’ll federally register the name.
- If you already have a federally registered trademark for the business that you want to use, we’ll prepare a license from the existing registered holder to the newly formed franchising company (see Step 5 – Formation of New Franchising Company).
Then, under the Franchise Agreement that you sign with each franchisee, the franchising company will license to the franchisee the right to use the trademark in operating its outlet.
Before registering a trademark, our intellectual property attorneys will conduct a nationwide search to find out if others are using the same or a similar name. Most likely you are already using a brand name for your business and will want to franchise under this brand name. The trademark search will determine whether you can use this brand name and in which markets (or nationwide). If the name appears to be available—because others aren’t currently using it—our intellectual property attorneys will work with you to register your mark under federal law. While many state laws permit registration of trademarks, a federal trademark registration locks in your right to use the name nationwide and is therefore necessary for franchising.
What is a Trademark?
A “trademark” is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. A “service mark” is a word, phrase, symbol, and/or design that identifies and distinguishes the source of a service (rather than goods). The term “trademark” is typically used to refer to both trademarks of goods and service marks of services.
Why Trademark a Name?
You should federally register your business’ trademark prior to franchising for two reasons:
- A federal trademark registration secures the right to use the name nationwide and is therefore necessary for franchising. A federally registered trademark provides prima facie evidence of ownership and grants you the exclusive right to use the mark nationwide in the classes registered. Once licensed to franchisees, franchisees can operate under the trademark.
- If a franchisor registers a federal trademark, the franchisor doesn’t need to register its franchise offering in any of approximately 36 states requiring the registration of “business opportunities” (business opportunities are broader than franchises, but include franchises). Therefore, the franchise offering need only be registered in the 14 franchise registration states.