Buying a franchise: Check the trade mark rights

When you buy a franchise, you join a network in which the shared name often accounts for a significant part of the value. But a familiar logo is not proof that the party you are contracting with can grant you the right to use it in Denmark. Before investing in signage, fitting out your premises and local marketing, you should check who owns the trade mark and whether your right to use it is adequately protected.

1. Find out who owns the name

Start by asking the franchisor for a list of the trade marks you will be using. This should cover both the name and any relevant logos, along with registration numbers, the owner, geographical coverage and the goods or services for which the marks are protected.

Then check the information in the relevant registers. The Danish Patent and Trademark Office’s register is relevant to Danish rights, while EUIPO registers EU trade marks, which also apply in Denmark. International registrations may be relevant if they cover Denmark or the EU; in these cases, WIPO’s records form part of the checks.

In particular, look at:

• Whether the mark is registered or an application is merely pending.
• Whether the registration is still in force.
• Whether the owner is the company identified by the franchisor.
• Whether protection covers the goods or services your business will sell.
• Whether any oppositions or other matters are recorded that require further clarification.

A company name in Denmark’s Central Business Register (CVR), or a registered domain name, does not in itself establish trade mark rights. Conversely, the absence of a registration does not necessarily mean that no rights exist: under Danish law, trade mark rights can also arise through use. Such rights require a different assessment of the evidence. Have an adviser investigate unclear findings rather than drawing conclusions from a single search.

2. Trace the right to use the mark through to your business

It is not necessarily a problem if the franchisor does not own the mark itself. The rights may be held by another company that has licensed them to the franchisor. For international franchise systems, for example, a Danish master franchisee may have been granted the right to establish the local franchise network.

What matters is whether that permission actually includes the right to grant you the agreed use of the mark. Ask for documentation showing the full chain of rights between the owner, the franchisor and your business. If the underlying agreement is confidential, relevant extracts or direct confirmation from the rights holder may be a starting point. Your lawyer should assess whether the documentation is sufficient.

Compare the terms of the agreements as well. If your franchise agreement runs for longer than the franchisor’s own licence, you need an explanation of how your continued use will be secured. An expectation of renewal is not the same as an existing right.

Also ask whether the licence covers every use required by the franchise system: shopfronts, packaging, websites, social media and local advertising. Do not simply assume that the right to use the name on a physical shop extends to every digital use.

3. Understand the Danish rules behind the checks

Denmark has no specific franchise law and no compulsory franchise registration that serves as official approval of a franchise system. Nor is there a franchise-specific requirement for a standardised disclosure document before signing.

Instead, franchise agreements are governed by the Danish Contracts Act and general principles of contract law. General duties of good-faith disclosure and liability for false or misleading information may be relevant during negotiations. The absence of specific disclosure rules therefore does not mean that a franchisor is free to conceal significant problems with trade mark rights.

Trade mark protection itself is governed by, among other legislation, the Danish Trade Marks Act and, for EU trade marks, the EU Trade Mark Regulation. The Danish Competition Act and EU competition rules may also be relevant to restrictions in the agreement. Which rules are decisive in practice depends on the rights and the agreement concerned.

The practical implication is simple: do not treat a signed franchise agreement as proof that all underlying rights have been checked. Documentation of your right to use the mark should form part of your legal review before buying.

4. Agree what happens if the rights fall short

A register check provides a snapshot. The agreement must also address problems that arise later. Ask for clear provisions requiring the franchisor to secure the agreed right of use throughout the contract term and to notify you of significant disputes.

In particular, clarify who will handle any third-party claim and who will pay for legal assistance. Also agree how you should respond if you receive an objection directly. You should not be left to decide alone whether to continue or stop using the name.

If the mark has to be changed or can no longer be used, the agreement should address your options: putting the problem right, providing a replacement mark, paying for necessary changes to signage and potentially allowing you to exit the agreement. These are points for negotiation, not automatic rights with a predetermined scope. At the same time, check whether general limitations of liability undermine the protection you have been promised.

Practical takeaway: Ask for a list of trade marks, evidence of the licensing chain and clear terms covering problems with the rights. Have the material assessed before committing money to a name your business depends on.