Franchising in Canada: protecting your trade mark

A business that is well known locally does not necessarily have a trade mark ready for use across Canada. Before offering your first franchise, check that you can authorise other entrepreneurs to use your name and protect its reputation. For a prospective franchise network, this groundwork avoids building recruitment, signage and contracts around uncertain rights.

1. Check your rights before promising use of the brand

Start with an inventory: trading name, logo, slogans, distinctive product names, domain names and social media accounts. For each item, record the owner, the earliest known date of use and the documents available.

Registering a company or reserving a domain name is no substitute for registering a trade mark. Similarly, using a name for several years in one city does not guarantee that expanding elsewhere will be free of conflicts.

Commission a trade mark clearance search tailored to your expansion plans. It should examine identical and similar marks, the goods and services concerned, and relevant commercial uses. A search of the Canadian Intellectual Property Office database is a starting point, not a comprehensive legal assessment.

Also check the chain of ownership. Does your company actually own the logo, or are the graphic designer’s rights still unclear? Is the mark held personally by the founder? If another company owns it, does the prospective franchisor have the necessary permissions to license it to franchisees?

Useful deliverable: a record for each distinctive brand element, setting out its owner, status, identified risks and the steps needed before any recruitment begins.

2. Choose protection that fits your concept

The federal Trademarks Act governs trade mark registration and protection. Subject to the Act, registration grants an exclusive right to use the mark in Canada for the specified goods and services. Rights can also arise through use without registration, but their scope and enforcement require a separate assessment.

With a trade mark agent or a suitably qualified lawyer, decide what to protect: the name, the logo or several elements separately. Protection focused solely on a logo may become less suitable if the visual identity changes.

Describe the goods and services to reflect your actual business and any developments you are seriously considering. A restaurant planning to sell packaged sauces should have that extension assessed rather than assume its existing protection covers it.

Filing an application is not the same as securing registration. Avoid presenting the outcome as certain to prospective franchisees. Make arrangements to track deadlines, renewals and changes of ownership too. The aim is not to accumulate applications, but to hold rights that match what you intend to license.

3. Define the licence and exercise the required control

The franchise agreement should specify the authorised marks, permitted uses, the duration of the authorisation and what happens when it ends. It should also cover digital channels and assets: local domain names, social media accounts, business listings and paid advertising.

Section 50 of the Trademarks Act is particularly important. Subject to its conditions, a licensee’s use of a mark benefits the owner where the owner directly or indirectly controls the character or quality of the goods or services. A control clause is therefore no substitute for exercising control in practice.

In particular, provide for:

• approval of signage and local advertising;
• quality standards for goods or services bearing the mark;
• documented checks and follow-up on corrective action;
• a procedure for reporting unauthorised uses;
• removal of distinctive brand elements and arrangements for digital accounts when the franchise relationship ends.

Control should protect the shared brand promise without suggesting that the franchisee is simply an outlet owned by the franchisor. Have these provisions reviewed to ensure they are consistent with the parties’ legal independence.

4. Align recruitment, disclosure and the contract

Canada has no general federal franchise law. Franchise-specific obligations arise notably under the laws of the provinces where the franchised business will operate; they apply alongside federal trade mark rules.

For example, Manitoba’s The Franchises Act and its regulation require pre-contractual disclosure and, subject to applicable exceptions, a period of at least 14 days before signing or payment. In Quebec, which has no franchise-specific legislation, the Civil Code of Québec applies. The Charter of the French Language must also be taken into account, particularly for signage and contractual documents.

Have the requirements of each target province checked before seeking commitments. The status of the marks, licence restrictions and relevant disputes should be reviewed to determine what information must be disclosed. Your sales presentations must never promise exclusivity or protection beyond the rights you actually hold.

Key takeaway: before recruiting, assemble evidence of three things: who owns the mark, which rights will be licensed and how their use will be controlled. Then have these arrangements checked for legal consistency.