Franchising and trademarks go hand-in-hand. When you franchise your business, a primary legal right that you will be granting to your franchisees is the license and right to use your trademarks. Franchisees will replicate your business model, and in doing so, will use your trademarks. As franchisor, you will instruct your franchisees as to how they may and may not use your trademarks, and it’s your obligation to make sure that your trademarks are registered with the United States Patent and Trademark Office (“USPTO”) and protect your trademarks from any infringing uses by competitors. Since trademarks are so important to franchise systems, FDD Item 13 is specifically devoted to disclosing information about your trademarks to prospective franchisees.
Below, we review the basics of franchising and trademarks, what you need to know about your trademarks as a franchisor, trademark registration, and trademark protection.
A trademark is a word (i.e., your business name), symbol (i.e., your logo), or both (i.e., the name of your business combined with your logo) that is used to identify your business, to identify the goods you sell, and to identify the services that you provide. A trademark may also include slogans that you use in the identification of your business.
Just because you have a trademark to identify your business doesn’t mean that you own it or that it is legally protected. Ownership and legal rights for a trademark come about through two sources:
In addition to evaluating “how” you obtained your trademark rights, it is important to evaluate the strength of your trademark. Under the law, a trademark that is “descriptive” is not protected by law, while trademarks that are “arbitrary” or “suggestive” have the capacity for legal protection.
Protection of your trademarks will require the filing of a trademark registration application with the USPTO. The trademark registration application will include a sample of your trademark, identify the owner of the trademark, identify the date that you first used the trademark in commerce, and list the classification codes for your business. Once a trademark application is filed, there will be a waiting period until the application is assigned to an “examining attorney.” The examining attorney will conduct trademark searches to determine whether or not someone else already registered the trademark, and evaluate the legal strength of the trademark to determine if it is legally protectable.
If the examining attorney believes the trademark is descriptive, she will issue what is known as an “office action letter” where she indicates that she has refused to grant registration. Part of the trademark registration process will involve responding to office action letters, where your franchise lawyer addresses issues raised by the examining attorney.
If your trademark application passes review by the examining attorney, your application will be published in what is known as the Trademark Official Gazette, which serves as notice to the world that you are claiming protection for your trademark. If there is no opposition to the publication of your trademark, then registration will eventually be granted. The typical time period for obtaining USPTO trademark registration is approximately eight months from the date of your initial registration application.
FDD Item 13 is specifically devoted to disclosures about a franchisor’s trademarks. Within Item 13, a franchisor must disclose each principal trademark, whether or not each trademark is registered with the USPTO, the status of all USPTO trademark applications, and the renewal status of each trademark. Additionally, within Item 13 a franchisor must disclose “the existence of any pending litigation, settlements, or superior rights that may limit a franchisee’s use of the trademark.” If a trademark is not registered with the USPTO, Item 13 must include the following trademark registration disclaimer:
We do not have a federal registration for our principal trademark. Therefore, our trademark does not have as many legal benefits and rights as a federally registered trademark. If our right to use the trademark is challenged, you may have to change to an alternative trademark, which may increase your expenses.
As a franchisor, it is critical that you evaluate and protect your trademarks at the franchise development stage, through the launch stage of your franchise system, and on an ongoing basis as your franchise system grows.
Lawsuits involving trademark infringement are, most commonly, governed by federal law. The Lanham Act provides a federal cause of action for trademark infringement. Franchisors possess claims for trademark infringement against any third party (including former, and possibly, existing franchisees) who use a “word, symbol, or device” to “cause confusion” regarding the source of origin of the products or services offered by the third party. When assessing a potential lawsuit involving trademark infringement, franchisors must consider the following:
Trademark factors you should know and understand include:
Franchising may be the next big step for your business and brand. So, how do you know whether or not you should franchise your business and if franchising is right for you? The answer depends on your business, your business goals, your personal goals, your budget and where you want... read more
In this guide you’ll learn the basics of franchising, how to franchise your business, and how to win at franchising. We’ll also take a deeper dive into legal requirements for franchising and why they matter, steps to take before and after you launch your franchise, and even some tips on... read more
When considering expanding a business both franchising and licensing are possible options. In this guide, you'll learn the differences of franchising and licensing and understand how each will affect you. read more
Are you a successful business owner? Are you looking for ways to expand your business? If so, this article will provide the answers you need to decide whether franchising your business is the right step for you. In short, franchising allows you, the franchisor, to create a relationship among several... read more
Under federal law, prior offering or selling a franchise in any state, franchisors are required to disclose a franchise disclosure document (FDD) to their prospective franchisees. In addition to federal law certain states, including the franchise registration states, require that franchisors register their FDD with the state. The legal documentation... read more
If your business is successful and you are looking to expand, for good reason, you may be asking questions like “is my business franchisable?”, and “can my business be franchised?” To answer these questions and determine whether or not your business is ready for franchising, you should evaluate the following... read more
Key strategies to accelerate franchise growth for startup and emerging franchisors In this webinar, franchise attorney Charles Internicola and Nick Powills, founder of No Limit Agency and 1851 Franchise, discuss key strategies to accelerate franchise growth through PR and digital media. Some topics include: Steps franchisors should take when it... read more
One of the biggest issues for emerging franchisors is not having a plan for insurance and system-wide protection. What do emerging brands need to know when they're starting off, who should they rely on, and how can they plan ahead? Get an insurance game plan to protect your franchise system... read more
Key strategies for developing the right logo & trade dress to drive franchise growth with branding and design expert Dan Antonelli. Dan is the author of ‘Building a Big Small Business Brand’ and is the creative director of the branding firm KickCharge Creative. Learn how to drive franchise growth and... read more
With services to make your growth strategy simple, cost effective, and with a team excited to help you, let’s talk about how we can help grow your business.
Fill out the following form and we’ll contact you as soon as possible. To reach our team directly, give us a call at (800) 976-4904.
An attorney client relationship is not established by submitting this initial contact information.