Trade marks before franchising: getting your brand ready

Running a successful outlet does not necessarily mean you can safely let other businesses use its brand. When building a franchise network, a dispute over the name affects not only the founder but also franchisees who have invested in signage and advertising. Before offering your first franchise, check three things: who owns the brand, what its protection actually covers and which rights you can grant to others.

1. Get your brand ownership in order

Start by listing the signs customers associate with your business. These include the name, logo and, where relevant, a slogan or the names of your own products. For each item, identify the owner, the documents showing how the rights arose or were acquired, and who currently uses it. Include domain names and social media accounts too, even though these are not trade marks in their own right.

Fragmented ownership is a common problem when expanding an existing business. The founder may hold the trade mark in their own name, a company may run the business, and a freelance designer may have created the logo. Meanwhile, another company may be intended to sign the franchise agreements. This arrangement is not necessarily impermissible, but there must be a clear legal chain allowing the brand to be licensed to franchisees.

In particular, check:

• whether the owner's details in the register are accurate;
• whether the agreement with the designer permits the intended use of the logo, alterations to it and its use by franchisees;
• whether any existing licence includes the right to grant sublicences;
• whether the brand is subject to a dispute or third-party rights.

Simply paying an invoice for a logo is no substitute for a properly defined licence. If someone other than the future franchisor is to hold the rights, have their legal relationship formalised before you start recruiting franchisees.

2. Check the name, territory and list of goods and services

Registering a company name in the Commercial Register or registering a domain name is no substitute for a trade mark. Equally, using a name for many years does not automatically guarantee that you are not infringing someone else's earlier rights.

Carry out a trade mark search before filing an application. For the Czech market, searching only the national marks held by the Czech Industrial Property Office is not enough. European Union trade marks and international registrations covering the Czech Republic may also be relevant. Look not only for identical signs but also for similar names, pronunciation and graphic elements used for related goods and services.

Do not assess the results solely in terms of whether the name is ‘available’. An overly descriptive sign may be difficult to register and have weak distinctive character. A word mark generally protects the wording itself, without tying it to a particular graphic design; a figurative mark protects the sign in its registered form. Base your choice on what customers actually recognise.

Pay particular attention to the list of goods and services. If you run a café and also want to sell packaged coffee under the same brand, do not assess protection solely in terms of café services. The scope of the application must match the intended use. The list cannot simply be broadened after filing; additional protection may require a new application.

Choose the territorial scope according to a realistic expansion plan. A Czech national trade mark provides protection in the Czech Republic, while a European Union trade mark has unitary effect across the EU. Broader protection is not, however, a substitute for a search or an assessment of potential conflicts.

3. Link the trade mark to the franchise agreement

In the Czech Republic, there is no specific franchising act or compulsory state register of franchises. Franchise networks operate within the general legal framework. A franchise agreement is usually concluded as an innominate contract — one not specifically defined by statute — under section 1746(2) of Act No. 89/2012 Coll., the Civil Code. The Code's provisions on licence agreements also apply to the licence.

National trade marks are governed by Act No. 441/2003 Coll., on Trade Marks. For EU trade marks, the key legislation is Regulation (EU) 2017/1001 of the European Parliament and of the Council. Depending on the circumstances, the Copyright Act and the Civil Code's rules against unfair competition may also apply. Registering a trade mark therefore neither registers the franchise nor constitutes approval of the business concept as a whole.

List the specific trade marks, their numbers and the scope of permitted use in the agreement or a schedule to it. Clarify the territory, licence term, any exclusivity and permitted use in advertising, on packaging, on websites and on social media. If an application has not yet resulted in registration, describe its status accurately; do not promise protection that is not yet in place.

The agreement should also cover approval of local advertising materials, a ban on unauthorised alterations and the procedure for dealing with suspected infringement. Plan for the end of the relationship too: removal of signage and branding, discontinuation of advertising, arrangements for remaining stock, and the transfer or renaming of local online accounts.

4. Set up brand management across the network

Appoint someone to monitor deadlines, renew registrations and maintain licence records. A trade mark is registered for ten years from the filing date, and its protection can be renewed repeatedly. Keep evidence of genuine use as well: photographs of outlets, packaging, invoices and advertising materials. Prolonged non-use can put protection at risk.

Give franchisees approved artwork and a straightforward point of contact for questions or reports of imitation. Consistent rules protect their investment as much as the founder's reputation.

Practical takeaway: Before offering your first franchise, prepare an overview of rights holders, the search results, a protection plan and a draft licence. Resolve any uncertainties before franchisees order their signage.