Trademark Licensing for Franchises in China: Check Who Can Authorise Your Use of the Brand Before You Sign

When entering China’s franchise market, the brand on your shopfront is an important business asset. But the company recruiting franchisees, the company signing your agreement and the trademark owner may be different legal entities. Before paying fees or fitting out your premises, the question is not simply, “Does this brand have a registered trademark?” It is, “Can this company lawfully authorise my outlet to use it throughout the agreement’s term?” This guide covers franchise projects in mainland China.

1. Establish the Contracting Company’s Authority to Grant a Licence

Article 3 of the Regulations on the Administration of Commercial Franchising identifies registered trademarks, corporate logos, patents and proprietary know-how, among other assets, as resources used in franchising. A franchisor may operate a franchise using business resources it has been lawfully authorised to use; not every trademark has to be registered in its own name. However, the rights it holds must be sufficient to support the licence it grants to franchisees.

So it is not necessarily a problem if the contracting company is not the trademark owner. Equally, a “brand cooperation certificate” alone does not prove that it has the right to recruit franchisees.

Start by mapping a simple licensing chain: trademark owner → domestic operating company → contracting company → your business entity. Every link should be supported by documents. Claims such as “we are all part of the same group” or “we have the same owner” are no substitute.

Overseas brands warrant particular care: an overseas trademark registration certificate alone does not establish the corresponding registered trademark rights in mainland China. Check the Chinese registration details, or the details of an international registration that designates China and has obtained protection there.

2. Check the Specific Goods and Services Covered

Ask the brand to provide a list of the trademarks your outlet will use, including Chinese and foreign-language names, logos, registration numbers, registered owners, the goods or services covered, and expiry dates. Do not focus solely on the most prominent logo in the franchise sales material.

Check each entry through the official trademark search services provided by the China National Intellectual Property Administration, bearing in mind that records may not reflect the latest changes. Focus on the following:

• Is it registered? Acceptance of an application is not the same as approval for registration. An application acceptance notice is not a trademark registration certificate.
• Does it cover your actual business? Selling goods and providing services at an outlet may involve different trademark classes. Do not rely on class numbers alone: check the specific goods and services listed.
• Is it still valid? Check the status of any renewals, assignments, cancellations or invalidations. Ask for further clarification where there is a dispute.
• Is it the mark you will actually use? Different word marks, logos or combined versions may need to be checked separately.

Under China’s Trademark Law, a registered trademark is valid for ten years from the date of approval for registration and may be renewed in accordance with the law. If the trademark expires before your franchise agreement ends, that is not necessarily a reason to reject the project. However, responsibility for renewal—and what happens if renewal is unsuccessful—should be clearly agreed.

3. Check Whether the Upstream Licence Permits Sublicensing

A letter stating that a company “may use the brand” does not necessarily mean that the contracting company can sublicense that right to you. Ask to see the complete licence agreement and any supplementary documents. Where necessary, obtain written confirmation from the trademark owner that sublicensing is permitted.

Check five boundaries: who may grant permission, what is licensed, where it may be used, for how long, and through which channels. In particular, check whether the upstream licence permits franchising and sublicensing, and whether it covers actual uses such as signage, packaging, food delivery platform pages and promotional materials.

For example, if the domestic operating company has only two years left on its upstream licence but proposes a five-year agreement with you, there is a gap that needs resolving. “It will definitely be renewed” is no substitute for an enforceable arrangement. You could require the authorisation to cover the full term, or agree an exit and fee-settlement mechanism if renewed authorisation is not obtained.

It is also important to distinguish between two filing requirements. The Regulations on the Administration of Commercial Franchising require a franchisor to file with the competent commerce authority within 15 days of entering into its first franchise agreement. This filing does not guarantee the validity of each trademark licence. Separately, Article 43 of the Trademark Law provides for trademark licence recordal. An unrecorded licence cannot be asserted against a good-faith third party, but that does not simply mean the licence agreement is automatically invalid. Neither filing replaces the other.

4. Put Arrangements for a Loss of Authorisation in the Contract

If the agreement merely requires the franchisee to use the trademark correctly, without explaining what happens if the brand can no longer authorise its use, the outlet is left exposed to business risk. Consider attaching the trademark list, licensing-chain documents and usage guidelines to the agreement, and clearly addressing the following:

• Assurance of rights: The brand should warrant that it holds the lawful authorisation needed for the agreement and promptly notify you of changes to rights or disputes that could affect your outlet’s use.
• Handling disputes: Specify who must provide evidence of rights, coordinate the response and bear reasonable costs if an infringement complaint is received. Allocate responsibility separately for defective authorisation and for use by the outlet beyond the permitted scope.
• Remedies and exit: Set a period for remedying any lapse or interruption in authorisation. Specify when the agreement may be terminated, how fees relating to the unperformed portion of the term will be settled, and how liability for losses will be handled in accordance with the law.
• Stopping use: Set deadlines for dealing with signage, packaging stock, online shops and promotional content. Any transitional use must still be supported by lawful authorisation.

Do not assume that the brand’s agreement to pay compensation will prevent the trademark owner from requiring your outlet to stop using the mark. The contract primarily allocates responsibilities between the parties; it cannot replace the legal basis for using the trademark against claims by others. If you receive a complaint, investigate promptly and seek professional advice to avoid increasing your exposure.

Practical takeaway: Before paying substantial non-refundable fees, obtain the trademark list, the complete licensing chain and contractual provisions covering any interruption in authorisation. If the three do not align, pause payments and sign production rather than letting the money you have already invested pressure you into accepting the risk.