Buying a franchise: how to check trade mark rights

A familiar logo on a shopfront does not prove that the company you are dealing with is entitled to let you use it. When you join a franchise network, you are not buying ownership of the brand, but a contractually defined right to use it. Before paying for signage, packaging or advertising, check the trade mark, the franchisor’s authority and what will happen if you can no longer use the brand.

1. Establish exactly what is protected

Ask for a list of the trade marks you will use, including their registration numbers, owners, territorial scope and lists of goods or services. Distinguish between a word mark, which protects a name or wording, and a figurative mark, which may cover a particular graphic version of a logo. Registering one version does not automatically give every variation of the name and graphics the same protection.

Verify the details in the relevant public databases. For Czech national trade marks, the key authority is the Czech Industrial Property Office; for European Union trade marks, it is the European Union Intellectual Property Office, or EUIPO. For an international registration, also check that its protection actually extends to the Czech Republic.

In particular, check:

• whether the mark is registered and valid, or merely the subject of an application;
• whether the list of goods and services covers your planned activities;
• who is listed as the owner and when the registration is due for renewal;
• whether any proceedings are recorded that could put the protection at risk.

A registered company name or an internet domain is not the same as a trade mark. Nor does trade mark registration alone guarantee that a dispute will never arise. For a substantial investment, it is worth having a specialist assess the scope of protection and any potentially conflicting names or marks.

2. Trace the chain of rights from the owner to you

The franchisor need not own the trade mark. A foreign parent company may own the brand, while a Czech company offers franchises under its own licence. This arrangement is not inherently a problem. However, there must be documentary evidence that the franchisor is entitled to grant you the right to use it.

Ask for documents confirming the right to grant sublicences, their territorial scope and their duration. If the main licence agreement is confidential, you can discuss obtaining a relevant extract or confirmation from the owner. A simple statement that all the companies belong to the same group is not enough.

Compare the term of your franchise agreement with the duration of the franchisor’s rights. If you are expected to operate your outlet for longer than the Czech franchisor’s documented licence lasts, ask for an explanation and a contractual solution. Also check what happens if the main licence ends: whether a direct licence from the owner can be arranged, or how your costs will be covered. Any arrangement allowing you to continue must be more than a commercial promise.

3. Understand the Czech legal framework

The Czech Republic has no dedicated franchise law or specific mandatory pre-contractual disclosure document for franchises. A franchise agreement is usually concluded as an unnamed contract under Section 1746(2) of Act No. 89/2012 Coll., the Civil Code. The general rules on pre-contractual dealings and the relevant licensing provisions also apply.

Czech trade marks are governed by Act No. 441/2003 Coll., on Trade Marks. European Union trade marks are governed by Regulation (EU) 2017/1001 of the European Parliament and of the Council. A logo may also be protected by copyright, so establishing the right to use it may involve more than checking its trade mark registration.

The absence of franchise-specific legislation does not mean there is no legal protection. It does, however, mean that you need to negotiate the scope of the licence and the allocation of specific risks carefully. Membership of a franchise network or reference to a code of ethics is no substitute for evidence of rights to the brand.

4. Define permitted uses of the brand in the agreement

The licence should cover your actual operations, not just the name on the shopfront. Explicitly address use on packaging, workwear, local advertising, websites and social media profiles. Specify which versions of the logo are approved and who will supply up-to-date artwork.

Also agree a procedure for approving local materials. You need to know whom to submit designs to and how quickly you will receive a response. If an approved supplier prints your packaging or produces your premises’ signage, clarify their authority to use the artwork.

Treat the brand licence and the management of domains or accounts as separate matters. Permission to use a logo does not automatically give you access to a local social media profile or the right to register a domain containing the brand name.

5. Allocate the risks of disputes and a forced name change

Ask who will take responsibility if a third party alleges that its rights are being infringed. The agreement should cover notification of claims, legal representation, cooperation and payment of costs. Distinguish between a defect in the franchisor’s own rights and a situation where the franchisee has used the brand beyond the agreed scope.

If a dispute makes a name change necessary, the consequences go beyond a new logo. Costs may include signage, packaging, menus, advertising and notifying customers. Negotiate who will pay for these items, how they will be approved and what rights you will have if operations are restricted. Do not assume that fees will automatically be refunded or all expenses reimbursed.

Practical takeaway: Before signing, insist on three things: verified trade mark status, documented evidence of the franchisor’s authority and contractual provisions covering the loss of your right to use the brand. Without them, your investment in a familiar name may be unnecessarily exposed.