Your franchise brand: what to check before expanding

A brand that customers recognise is not necessarily ready to support a franchise network. Before offering your business to new partners, you need to check who holds the rights to the name, what protection is in place and what use can be authorised by contract. In the franchise sector, this preparation protects both the franchisor and those investing in an outlet.

1. Check who can authorise use of the trade mark

Brazil has specific franchise legislation: Law No. 13,966/2019, which replaced Law No. 8,955/1994. Under Article 1, the franchisor must own, or have applied for, the rights to the trade marks and other intellectual property covered by the arrangement, or have express authorisation from the rights holder.

This means that a granted registration is not the only status permitted under Brazil’s Franchise Law. A franchise arrangement can be based on a pending trade mark application. However, filing an application does not guarantee approval or eliminate the risk of conflict with earlier rights.

Start by identifying whose name appears on the applications and registrations. It is common for a business to operate through one company while the trade mark remains in the name of its founder or another company. This mismatch needs to be addressed before expansion, with a legal structure that supports authorising franchisees to use the mark.

Gather:

• details of the owner or applicant;
• application and registration numbers;
• evidence of the current status of each application or registration;
• authorisation documents, where applicable;
• a list of the trade marks actually used in the business.

If authorisation comes from a third party, seek specialist advice to confirm that it covers franchising and use by franchisees for a period consistent with the commitments being made.

2. Check that the protection matches the business

Trade mark protection is governed primarily by Law No. 9,279/1996, the Industrial Property Law. As a general rule, ownership of a trade mark is acquired through a registration validly granted by Brazil’s National Institute of Industrial Property (INPI), subject to statutory exceptions.

Having a CNPJ (Brazilian corporate tax registration number), a registered business name, an internet domain or a social media profile does not replace trade mark registration. These serve different purposes and should not be presented as sufficient proof of exclusive rights to the name used by the franchise.

Compare the goods and services listed in the applications or registrations with what the outlets will actually offer. A trade mark protected for a particular activity should not be treated as automatically protected for every form of business expansion.

Also examine how the brand is presented: its name, symbol and visual combination. If the identity has changed since filing, assess whether new applications are needed. Do not assume that every change falls within the existing protection.

A search for earlier trade marks helps identify identical or similar marks that could present obstacles. It requires an overall assessment of the marks, the activities involved and the likelihood of confusion; looking only for identical names is not enough. The findings inform decisions but do not guarantee approval by INPI.

3. Disclose the actual status in the COF and the agreement

Law No. 13,966/2019 requires the franchise disclosure document, known in Brazil as the Circular de Oferta de Franquia (COF), to state the status of the trade mark and other intellectual property rights associated with the franchise. This includes a description of those rights and the relevant registration or application numbers, with the class and subclass where applicable.

The wording must clearly distinguish between a pending application and a granted registration. Avoid saying that a trade mark is registered when there is only a filing receipt. Where significant obstacles exist, have their description reviewed by a legal adviser so that prospective franchisees understand the risks involved.

The agreement should translate that status into rules for use. Define which trade marks may be used, for which activities and for how long. Also clarify how digital use, locally produced materials and changes to the visual identity will be handled.

The COF, agreement and sales presentation must tell the same story. Accurate information in one document does not make up for an inconsistent promise made during negotiations.

4. Prepare to monitor rights and respond to problems

Trade mark management continues after the first franchise opens. Assign someone to monitor INPI proceedings, correspondence, deadlines and renewals. Even with external support, the franchisor should know who receives notifications and who approves any action required.

Also establish a procedure for dealing with potential challenges or the need to change the brand. Planning should cover legal assessment, communication with franchisees, updates to materials and contractual provisions allocating costs and responsibilities. Do not leave these decisions entirely until a crisis arises.

In practice: before offering your first franchise, compile a trade mark dossier, confirm your right to authorise use and ensure the documents reflect the actual position at INPI. A brand ready for expansion needs more than recognition: it needs verifiable rights and transparent management of risks.