Buying a Franchise in Croatia: Checking Trade Mark Rights

A recognisable name can be an important reason for joining a franchise network, but a brand’s popularity is not proof that the business offering the franchise is entitled to let you use it. If the rights to the name or logo are not in order, you could pay the initial franchise fee, fit out your premises and then have to change your branding. Before buying a franchise, check the trade mark, its owner and the legal chain through which the right to use it reaches you.

1. Distinguish between a brand, a company name and a registered trade mark

A brand is a broader commercial concept: it encompasses identity, reputation and customer experience. A company name is the name under which a company operates, while a trade mark is a right that protects a particular sign for specified goods or services. Entry in the court register of companies or registration of an internet domain does not, in itself, prove that a business holds trade mark rights.

Ask the franchisor for the exact trade mark, its registration number, the owner’s name and the list of goods and services for which it is protected. Check the name and logo separately: protection for a graphic sign may not offer the same scope of protection as registration of the word itself.

The following may be relevant in Croatia:

• A national trade mark, registered with the Croatian State Intellectual Property Office (DZIV).
• A European Union trade mark, registered with the European Union Intellectual Property Office (EUIPO), which is also valid in Croatia.
• An international registration under the Madrid System, where protection has been granted for Croatia or the European Union.

Registration only in the franchisor’s home country does not automatically provide protection in Croatia. Nor does an international registration provide protection in every country worldwide.

2. Check the status and scope, not just whether a record exists

Search the official databases of DZIV, EUIPO and, where applicable, the World Intellectual Property Organization (WIPO). Searching by name is a good starting point, but the registration number makes it easier to distinguish between similar signs and different owners.

First, establish whether the record is an application or a registered trade mark. A filed application is not the same as a completed registration. Next, check the status of the right, its expiry date and any available information about proceedings that could affect protection. A database extract alone is no guarantee that there is no dispute.

Pay particular attention to the list of goods and services. A trade mark registered for clothing is not automatically protected for all hospitality services. The class number provides a useful guide, but what matters is the actual wording of the list and a legal assessment of the scope of protection.

Compare the protection with what you will actually be doing: selling goods, providing services, running an online shop or manufacturing products under the shared name. Keep a dated record of your checks and check the status again before signing. If there are similar signs, oppositions or doubts about the scope of protection, consult a trade mark specialist.

3. Establish whether the business offering the franchise can grant you the right to use the trade mark

The franchisor does not have to own the trade mark. It may be a licensee or a master franchisee authorised to develop the network in a particular territory. Such an arrangement can be perfectly valid, but the franchisor must have authority to grant you the right to use the trade mark too.

Ask for evidence of an unbroken chain of authority: from the trade mark owner, through any intermediary, to the party to the contract to whom you pay your fees. In particular, check whether the underlying agreement permits sublicensing, covers Croatia and lasts long enough.

If the full agreement cannot be disclosed for confidentiality reasons, suggest a review by a lawyer subject to a confidentiality undertaking, or ask for relevant extracts and confirmation from the rights holder. A general statement that the business is an ‘authorised partner’ does not establish the extent of its authority.

Ask an uncomfortable but important question too: what happens to your business if the franchisor’s own licence ends? Your agreement should not leave the risk of losing the underlying right unaddressed. Ask for clear provisions on notification, any possibility of continuing the relationship directly with the rights holder, and the financial consequences of termination.

4. Allocate the risk of losing rights in the contract

Croatia has no specific franchise law or mandatory pre-contractual disclosure regime designed specifically for franchises. The contractual relationship is governed by the Croatian Obligations Act, including the principle of good faith and fair dealing. Relevant trade mark legislation includes the Croatian Trade Marks Act and, for European Union trade marks, Regulation (EU) 2017/1001. Competition rules also apply where contractual provisions fall within their scope.

The Croatian Chamber of Economy (HGK) franchise register can help you explore the franchises available, but it is neither a mandatory state franchise approval system nor confirmation of trade mark ownership.

With your lawyer, ensure the agreement includes at least:

• a statement by the franchisor that it holds the necessary rights and has authority to grant them;
• an obligation to maintain protection and renew the registration on time;
• an obligation to notify you of disputes and changes in status;
• a procedure for defending your use of the sign if a third party challenges it;
• an allocation of reasonable costs for changing signage, packaging and digital channels if the right to use the trade mark is lost.

These rights are not automatically guaranteed simply by joining a franchise network. Their substance must be clearly agreed in the contract, including liability, time limits and available legal remedies.

Practical takeaway: before making a non-refundable payment, bring together three things: valid protection in Croatia, evidence of the franchisor’s authority and contractual provisions addressing the loss of rights. A well-known name is only worth investing in if you can lawfully use it.