Buying a franchise: Check the rights to the name and trade mark

When you buy a franchise, you join a network in which the name, logo and brand recognition are shared assets. But an impressive sign is no proof that the franchisor can grant you the right to use them. Before investing in fitting out and opening your premises, check who owns the brand identifiers and whether your agreement gives you adequate rights to use them in Denmark.

1. Find out who owns the name

Start by asking for a list of the trade marks you will be using. This should include both word marks, such as the chain’s name, and figurative marks, such as its logo. Ask for registration numbers, the owner’s name, geographical coverage and the goods or services covered by the protection.

Trade marks may be protected in Denmark through Danish registrations, EU trade marks and international registrations effective in Denmark. Rights can also arise through use under the Danish Trade Marks Act. A lack of registration is therefore not, in itself, proof that no rights exist, but the evidence requires closer assessment.

Check the details in the registers maintained by the Danish Patent and Trademark Office, EUIPO or WIPO, depending on the type of registration. Pay particular attention to:

• Whether the mark is registered or merely the subject of an application.
• Whether the registered owner matches the owner you have been told about.
• Whether the protection covers Denmark and your planned activities.
• Whether the registration is in force and when it is due for renewal.

Registering a business name in Denmark’s Central Business Register (CVR), or buying a domain name, is no substitute for a trade mark search. Ask a trade mark adviser to assess any uncertainties; a register search alone cannot resolve every potential conflict with other parties’ rights.

2. Trace the rights through to your contracting party

It is not necessarily a problem if the franchisor does not own the mark itself. The owner may be another company in the same group or an international franchisor. What matters is that the party you are contracting with is entitled to grant you the necessary rights of use.

Ask for evidence of the entire chain of rights. If you are entering into an agreement with a Danish master franchisee, its agreement with the trade mark owner must allow it to pass on rights of use to local franchisees in Denmark.

You do not necessarily need access to all confidential commercial terms. Relevant extracts, written confirmation of the rights or a review by your adviser may be a solution. However, the evidence must be specific enough to answer three questions:

1. Which marks and uses is your contracting party entitled to authorise?
2. How long do the underlying rights last?
3. What happens to your rights of use if the underlying agreement ends?

Be particularly cautious if your franchise agreement runs for longer than the documented head licence. A promise of an expected renewal is not the same as a secured right. Have this dependency assessed before committing capital.

3. Understand the rules and request the evidence yourself

Denmark has no dedicated franchise law and no franchise-specific registration scheme. Nor is there a statutory, franchise-specific disclosure document that the franchisor must provide before you sign. This makes your own document checklist important.

The franchise agreement is subject to the Danish Contracts Act and general principles of contract law. The Danish Trade Marks Act and, for EU trade marks, the EU Trade Mark Regulation are central to the protection of the name and logo. The Danish Marketing Practices Act and competition law may also affect the agreement and the use of brand identifiers.

The absence of specific disclosure rules does not mean that the franchisor is free to provide false information. Misleading statements and material omissions may, depending on the circumstances, have consequences under contract law. Nevertheless, it is better to clarify the rights before buying than to bring a claim later over what you were promised.

Franchising codes of ethics can supplement the law, but they do not constitute official approval of the rights to a trade mark. Check which code, if any, the franchisor has committed to following, but do not let membership of an association replace your own checks.

4. Make the rights of use and responsibilities explicit

The franchise agreement should identify the relevant marks and describe how you are permitted to use them. This applies not only to signage on your premises, but also to websites, social media, packaging, advertising and local campaigns. Clarify who registers and manages local domains and accounts, so that unclear ownership does not cause day-to-day problems.

Also ask for clear provisions confirming that the franchisor holds the necessary rights and must maintain them throughout the agreement’s term. The agreement should set out who handles objections or infringement claims from third parties, and who pays for professional advice and any changes to signage and materials.

Ask directly: if we are required to stop using the name, who bears the loss? Have a lawyer assess both the liability provisions and any limitations. A contractual guarantee is of limited value if the party giving it cannot honour it.

Practical takeaway: Only sign once you have documentary evidence linking the trade mark owner to your own rights of use, and the agreement clearly allocates responsibility if the right to use the name fails.