Buying a franchise: how to check your rights to use the brand

When you buy a franchise, you do not acquire ownership of its name: you obtain a right to use it, subject to the contract. Across the franchise network, that brand identifies a shared offering and may account for a substantial part of your investment. Before paying for signage, uniforms or marketing materials, check which brand elements you can use, who can authorise you to use them and what would happen if a dispute arose.

1. Understand what rights the franchisor must hold

In Argentina, franchise agreements are governed by Articles 1512 to 1524 of the Civil and Commercial Code of the Nation. They should not be treated as contracts without specific statutory regulation.

Article 1512 provides that the franchisor must be the exclusive owner of the intellectual property rights, trade marks, patents, trade names, copyright and other elements included in the system, or have the right to use them and grant their use to the franchisee under the terms of the contract.

This means the business offering the franchise need not necessarily be the registered owner of the trade mark. In that case, however, it must have sufficient authorisation: permission to use a trade mark does not automatically include permission to let third parties use it.

Trade mark protection is also governed by Trade Marks and Trade Names Law No. 22,362. The relevant national authority is the National Institute of Industrial Property, known as INPI. Having a registered company, an internet domain or a social media account is no substitute for trade mark registration.

Ask a lawyer with intellectual property experience to review these records alongside the franchise agreement, rather than as a standalone check.

2. Create a record of the brand elements you will use

Receiving an image of the logo is not enough. Request details of the trade marks included in the deal and their registration records. For each one, record:

• Authorised mark: the name, logo or combination of the two.
• Owner: the individual or company named in the register.
• Registration details: the registration or application number, as applicable.
• Scope of protection: the goods or services covered and the relevant classes.
• Status and validity: whether registration has been granted or an application is pending, and the relevant dates.
• Intended use: shopfront, packaging, uniforms, advertising and digital channels.

Cross-check these details against INPI’s records. If you find pending applications, oppositions or discrepancies between the stated owner and the registered owner, ask for a documented explanation. A pending application is not the same as a granted registration.

The scope of protection matters too. Registration for particular goods does not, by itself, establish protection for every service your outlet will offer. Nor does an overseas registration establish protection in Argentina. The professional review should assess the records in relation to the specific business activities you intend to carry out.

3. Check the chain of authorisations

Where an international brand, a master franchise or a company other than the trade mark owner is involved, trace the chain of authorisations through to your contract. The aim is to verify that each authorisation allows the next right in the chain to be granted.

Request documents confirming, at a minimum, the territorial scope, the power to grant franchises or sublicences, and the duration of the authorisation. If confidential information is involved, arrangements can be made for a confidential review; a verbal explanation from the sales team is no substitute for this check.

Pay attention to any mismatch in duration: does the franchisor’s authorisation expire before your contract ends? Do not assume it will be renewed. Ask how your right to use the brand will be maintained and what contractual solution is provided if that authorisation ends.

The contract should identify the authorised brand elements and how they may be used. For example, it should clarify whether you can set up local social media profiles, register a domain or commission advertising materials. You should not assume you have these rights simply because other outlets already do so.

4. Agree what happens if the trade mark is challenged

Article 1514(d) sets out the franchisor’s obligation to defend and protect the use of the rights included in the franchise, with specific provisions for international franchises. Article 1515, in turn, requires the franchisee to report any infringements they become aware of immediately and to assist in protecting those rights.

Translate these obligations into a clear procedure: whom to notify, which documents to keep and who will coordinate the response if you receive a formal demand concerning the name or logo. Do not respond or admit liability without legal advice.

It is also worth agreeing how the costs and consequences of a dispute would be handled: replacing signage, withdrawing packaging, changing advertising or dealing with business interruptions. A general clause authorising use of the brand does not settle responsibility for all these costs.

Practical conclusion: before investing in your outlet’s branding, bring together three consistent elements: registration records, sufficient authorisation and a contract defining how the brand may be used and how it will be protected. If any of these is missing, postpone that expenditure until the position is clear.