The Vital Importance of Trademarks in Franchising a Business
Because a franchise is in essence simply a method of business expansion, and that the value lies heavily in the transfer and right to use an established trademark, the first step in preparing your business for franchise model distribution is to be certain that all your needed trademarks are obtained and secured. – Franchise Information
Now, while most businesses that consider franchising have been in business for some time, and because the fundamentals of trademark law are intended to offer protection for businesses who can prove first use of a trademark, most Franchisors find little difficulty in obtaining a federal trademark. However, for others it is often at the time of franchising that they first become aware that there are one or more businesses that are currently using their exact or similar trade name, and in many cases, have already filed and obtained US Patent and Trademark protection for those trade names or marks.v – Franchise Information
Because of this possibility, the first step in the franchise development process is to research and determine if all, or any of your business’ commonly used trade names, logos, word marks, service marks and other branding identifiers are available for trademark protection, or if they have already been reserved by another business prior to the date of your first using any, and all of those names or marks in trade. – Franchise Information
This process involves completing a formal trademark search, both at the state and federal level to determine if any prior companies have used, or filed for protection for the use of any of your specific or similar trade names or marks. This is accomplished either by you, your franchise consultant, attorney or a professional trademark search firm, which will complete a thorough search process to determine exactly what standing your trademark or similar trademark(s) currently maintain in the market. – Franchise Information
If the initial trademark searches reveal that another business(es) is using or has previously used one or more of your desired names or marks, or has formally filed with the US Patent and Trademark Office and obtained trademark protection, then the first obstacle your prospective franchise must overcome is deciding how to then adequately obtain protection for its market names before completing the franchise development process. Should you determine that your company trade names or marks are being used elsewhere, then you have only a few options available to you to attempt to secure the protection required for your franchise. – Franchise Information
First, you can research further and determine whether or not the previous business(es) that have used your affected names or marks is still currently using them in commerce, or if perhaps they have discontinued the use of the marks, or have closed their business. If this is the case, there is a regulatory time period that a business can temporarily or permanently discontinue the use of its marks in the marketplace, but still maintain its exclusive rights to their use and protection thereof. If it is determined that prior use business(es) have exceeded the maximum regulatory non-use period permitted, then it is possible for your company to submit a formal filing to the US Patent and Trademark Office and seek to obtain trademark protection for those marks. – Franchise Information
If, on the other hand, the prior use business(es) are still currently using any or all of these terms, or have not exceeded the maximum allowed non-use period, then the only way to obtain certain exclusive rights to use of the specific mark(s) is to seek out the transfer or purchase of these trademarks from the awarded business(es) either by a simple request or by a formal purchase of the rights. – Franchise Information
Often, businesses will file trademark protection for numerous trade names and marks and never, or limitedly, use them in actual commerce. Particularly larger organizations, with access to readily available legal staff, often choose to file trademark protection on marks early in their planning stages, only to later then decide on alternative terms, slogans and names for final use in their business trade. For this reason, it is recommended that if your business’ trade names or marks are previously used by another business(es), then oftentimes, you can obtain a formal ownership of these marks simply by contacting the current mark owner, explaining your business condition and requesting a transfer, either as a professional courtesy or for profit. Many businesses, if they are not using the requested mark, will be more than happy to grant or sell the marks to you and avoid further legal filing and maintenance requirements for marks they have no intention of using in the future. – Franchise Information
In the worst-case scenario, you will find that the trade name, logo or other word identifiers that you have been using in your business for years is legally owned and protected for exclusive use by another business. Many business owners do not realize that trademark infringement is a common and largely unintended violation in our national marketplace. The fact is, when most entrepreneurs set out to start their local private businesses and select trade names and logos initially, they are largely uncertain of their company’s chances for success. Most often, when our clients are informed of trademark conflicts, they respond similarly and state that they never really thought about the uniqueness and exclusivity of their trade names because at the time, they were simply trying to start a small business and never considered the future impact on their business, aside from trying to create a unique brand in their local markets. – Franchise Information
For that reason, it is likely that most entrepreneurs reading this article will nod in agreement with the notion that when they initially set out to start their business, many of these details were looked upon only briefly as there was a sense of trial and error driving many of their business’ initial decisions. In the end, it is a very common circumstance that we find older, successful businesses looking to franchise and only then realizing that they have little or no exclusive rights to their long-used trade names and/or marks.
Because franchising involves the extensive distribution nationally of a business and its brand, it is critical to obtain clear and formal trademark protection before selling a Franchisee a business and a brand that may later be challenged by a previous use business, or a business that has formally obtained a similar trademark protection. As a new Franchisor, you do not want to be faced with the complications and liability that could be imposed upon your franchise due to a trademark infringement issue.
In commerce, trademarks, on one hand can appear to be a quiet, almost unenforced concept. Each of us has encountered numerous multiple uses of names in the national business community. One simply has to travel a bit to notice the frequency of names in commerce, and acknowledge that in most cases, these conflicts can go unchallenged, as most business owners are focused solely on their local markets for abuses. – Franchise Information
On the other hand, you will occasionally encounter news of a trademark dispute so significant, its story makes endless headline appearances and becomes a significant corporate issue. These trademark cases end far more damagingly for the accused business trademark violator, with the business being forced to modify and/or discontinue the use of a particular trade name, often with no favorable options, but to essentially re-brand their entire business from scratch, hoping that they are able to transfer as much brand goodwill as possible to the new name or logo in the consumers’ eye. – Franchise Information
So, where does this leave the new Franchisor? If you are able to obtain and protect your trade names, logos and marks with certainty, or if you have already obtained trademark protection for the marks used in your business, then this process is largely complete and you can move on to the next step in the franchise development process.
If, on the other hand, you determine that another business (es), is using or has used, or obtained protection for your business marks, and you are unsuccessful in obtaining an ownership transfer by any means, then the only alternative you have is to seek the use of a new, alternate business trademark, complete the proper searches on the newly considered marks, and if successful, file for the appropriate trademark protection. – Franchise Information
Now, while the thought of re-naming, re-branding and re-marketing your business trade names may appear to be an insurmountable task, I can assure you that a franchise or traditional marketing firm with experience in the brand conversion process can effectively and successfully achieve this prior to your completing the franchise development process, thereby allowing you to move forward with all the appropriate trademark protection and first- class branding needed to launch a successful franchise. – Franchise Information
So, trademark issues alone should not dissuade you from entering franchising. The emphasis here is intended to urge preparation and clarification to avoid damaging surprises later, not to discourage you from allowing your business to benefit from the power of franchising. – Franchise Information
Again, because the essence of franchising relies so heavily on the ability to share use of a strong brand’s identity and trademark, it is essentially impossible to recommend that a business owner with questionable trademark protection go forward with a franchise development plan.