Trade marks at Brazil’s INPI: what to check before franchising

Turning an existing business into a franchise means allowing other entrepreneurs to invest in your commercial identity. Before offering that right, you need to check whether the trade mark is legally available for use and whether its protection covers the business you intend to replicate. In franchising, these checks protect both the founder’s assets and future franchisees’ investment.

1. Confirm who can authorise use of the trade mark

Article 1, paragraph 1 of Law No. 13,966/2019, known as Brazil’s Franchise Law, requires the franchisor to own, or have applied for, the rights to the trade marks covered by the agreement, or to have express authorisation from the owner.

This means that a granted registration is not the only basis on which a business may franchise. A pending application may satisfy the legal requirement, but it does not offer the same security as a granted registration: Brazil’s National Institute of Industrial Property (INPI) may still refuse it.

Start by comparing three pieces of information:

• Who is listed as the owner or applicant in the INPI file;
• Which legal entity will act as the franchisor;
• Which sign will actually be used at the franchise outlets.

It is common for a trade mark to be held in the founder’s name while another company manages the expansion. This difference needs to be addressed through appropriate documentation. Depending on the circumstances, you may need to formalise an assignment or obtain suitable authorisation allowing the franchisor to permit franchisees to use the mark.

A CNPJ number (Brazilian business tax registration), company name, domain name or social media profile is no substitute for trade mark registration. These are distinct identifiers. Gather the existing documents and ask for a legal review of the chain of ownership before making commitments to prospective franchisees.

2. Check that the protection covers the business

Trade mark protection in Brazil is also governed by Law No. 9,279/1996, the Industrial Property Law. As a rule, ownership of a trade mark is acquired through a validly granted registration, subject to statutory exceptions. Your review should go beyond looking for an identical name in the INPI database.

Search for signs that are similar in spelling, pronunciation and visual appearance, taking related goods or services into account. Being in different classes does not automatically eliminate the risk of conflict; being in the same class does not, on its own, settle the question either.

Next, compare the specification in the application or registration with the actual business operations. A company that began by selling products may have added services, in-house manufacturing or other activities. The protection originally sought may not cover that evolution.

Create a table with four fields: trade mark used, owner, protected goods or services, and application or registration status. Include the main trade mark and any product range or service names that will be essential to the franchise.

Also check whether the logo in use matches the protected version. A significant redesign may require a new application, depending on the circumstances. The aim is not to register every variation indiscriminately, but to identify gaps that could undermine the use promised to franchisees.

3. Treat a pending application as an expansion risk

Filing an application does not mean it has been approved. Before you start offering franchises, review the full history of the application: official requirements, oppositions, decisions and deadlines may affect your assessment of the trade mark’s legal security.

Assign someone to monitor the INPI’s official publications and maintain a schedule of required actions. Even after registration is granted, renewal, use and the updating of records need attention. Trade mark management does not end with the certificate.

If an application is pending or there is a significant dispute, prepare a contingency plan before rolling out signage and materials across multiple outlets. Discuss the following with specialist advisers:

• Which events would require a review of the expansion plan;
• How any rebranding would be implemented;
• Who would bear the cost of replacing materials;
• How prospective and existing franchisees would be informed.

Do not describe a pending application as a “registered trade mark”. Nor should you promise unrestricted exclusivity without assessing the limits of the protection. The greater the investment in visual branding, the more important it is to resolve uncertainties before entering into agreements.

4. Align the trade mark’s status with the franchise offer and agreement

Brazil’s Franchise Law requires the franchise disclosure document, known 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, including the details required by Article 2, item XIV. The description must reflect the documentary evidence, not an expectation of approval.

The COF must be delivered at least ten days before the signing of the franchise agreement or preliminary agreement, or the payment of any fee to the franchisor or a person or company connected with it. Do not request an early payment to “reserve the trade mark” in disregard of this period.

In the agreement, define the authorised signs, conditions of use, arrangements for dealing with infringement and obligations after termination. Distinguish commercial territorial exclusivity from trade mark protection: they are related matters, but they are not equivalent.

In practice: before recruiting your first franchisee, compile a file covering ownership, INPI status, the scope of protection and authorisations. Expand only once the risks have been identified and the information is consistent across all documentation.