Why are Trade Marks Important for a Franchise?

Ensuring that strong trade mark protection is in place is essential at the onset of any new franchise, not only because it is a legal requirement of most franchising agreements but also because it ensures that each party can protect their respective interests going forward.

What is a Trade Mark?

Trade marks are badges of origin, designating the source of specific goods and services.

A trade mark can be registered in order to give the right to exclude others from using it in relation to specific goods and services. In order to obtain a registration, the trade mark owner must file applications in specific territories at the relevant intellectual property offices specifying the goods and services for which they are seeking exclusive use of the mark.

What is Franchising?

Like patents, trade marks are IP assets which can be licensed to third parties.

Franchising is a particular form of trade mark licensing wherein a business (the franchisor) gives one or more persons (the franchisee) the rights to market a product or service using the franchisor’s trade marks, trade secrets and trade dress.

Franchising can be very advantageous for both franchisors and franchisees.

For franchisees, franchising can be a very good way to kick off a new business. Franchisees get the opportunity to trade under an established name and to get access to a business model and sometimes to trade secrets (think of food or drink recipes, know-how, supplier lists, etc.) which have already been tested by the franchisor and proven successful.

For franchisors, franchising can be a very efficient way of generating revenue and of expanding abroad. Franchisors will generally receive monthly royalties from their franchisees.

Why are Trade Mark Registrations Important for Franchising?

For Franchisors it is critical to evaluate and protect their trade marks at the onset of a franchise arrangement and on an ongoing basis as the franchise expands.

In addition, franchisors should ensure that they are in a strong position to enforce their trade mark rights versus potential franchisees who do not respect the agreement’s terms, for example, if a franchisee without permission extends the use of their trade mark beyond the goods or services approved in the agreement.  A franchise agreement can also include terms governing the use and presentation of the brand, to ensure a consistent customer experience.

Franchisees should also seek indemnifications against liability for infringement of third party rights through use of the mark.


If you are in business it is always important to have trade mark protection in place, but this is even more true if you are thinking of generating revenue from your trade mark by franchising it.

Franchisors should carry out proper searching to ascertain that their marks are free to use and registrable and they must police their marks once they are registered to monitor usage by third parties.

A franchisee should carry out proper due diligence and review the terms of the franchise agreement to make sure that the brand they are licensing will provide the commercial benefit that is claimed by the franchisor.


At Scintilla, we help innovative companies get a grip on their intellectual property. Our unique commercial approach combines registration of patents and trade marks with strategic input so that IP can be a springboard for business growth. If you would like to discuss your IP needs, do contact us or book a free initial consultation!