News & Updates

Trade-marks are Critical to Franchising

May 05, 2013

A franchise can mean a lot of different things to different people.  To some, it is a gateway towards business ownership with potentially less risk than going it alone.  To others, it’s the ability to sell a product and provide a service which has a level of quality associated with it.  But, at the end of the day, franchising starts with one basic element – a license to use a trade-mark.

And, yet, I am constantly surprised by the number of first-time franchisors who do not appreciate the value in obtaining trade-mark protection for their name or logo, who are happy to keep their fingers’ crossed for the first few years and hope that nobody else uses, or is already using, the same or similar name.  The trade-mark goes a long way in creating the value that is the franchise system – it implies the support which franchisees seek to have, and certifies the quality of that good or service being sold and purchased.  It’s the beacon that tells customers that there will be no surprises with this business – it will provide the same reliable products and atmosphere which they have come to expect elsewhere.

There are a number of advantages in owning a trade-mark that is registered with the Canadian Intellectual Property Office.  A registered trade-mark gives the owner the right to enjoy the exclusive use of that trade-mark in Canada, even if the mark will not be used across the country.  Trade-mark infringement of a registered mark will be easier to establish than would be the case under a common law passing off action.

A registered trade-mark also serves as notice of the public of your ownership interest, and potential competitors who are diligent enough to conduct a trade-mark search prior to conducting business under a similar name or with a similar mark will be alerted to the unavailability of your mark, or anything confusingly similar.  Registered trade-marks generally provide stronger protection against a competitor, certainly, but also against a non-competitor where their use of a similar mark may have the affect of depreciating the goodwill associated with your trade-mark.

Further, as a licensor of a registered trade-mark, you can exercise a sufficient degree of control over the character and quality of goods and services sold in association with your trade-mark, and registration of a trade-mark in Canada can entitle you to trade-mark registration abroad.

The advantages of trade-mark registration are self-evident for both franchisors and their franchisees who are licensees of the mark, and should be considered a mandatory first step on the road to franchising a business.

Tags: Franchising