Buying a franchise: check your right to use the trade mark

When you join a franchise network, part of what you pay for is the right to use a shared brand. Before signing, you therefore need to establish who owns the brand identifiers and on what basis your business will be entitled to use them in Finland. A familiar name, an impressive website or a logo attached to the agreement does not prove that those rights are secure. Careful checks protect your investment if the trade mark changes hands, its protection is challenged or the franchisor’s own licence ends.

1. Identify the trade mark and check its protection in Finland

Ask the franchisor for a list of the trade marks your business will use. The list should distinguish between word marks, figurative marks and any service-specific marks. For each one, record the registration number, owner, geographical scope of protection, goods and services classes, and registration status. This ensures that your checks concern specific rights rather than a general promise that you can use the brand.

Protection in Finland may derive from a national registration, an EU trade mark covering the whole EU, or an international registration whose protection extends to Finland. Check national records with the Finnish Patent and Registration Office (PRH), EU trade marks with the European Union Intellectual Property Office (EUIPO), and international registrations with the World Intellectual Property Organization (WIPO). An international registration does not, in itself, provide worldwide protection.

Compare the goods and services covered by the registration with your planned business activities. A name may be protected for certain products but not for all the services marketed by the network. Also check whether the mark is already registered or merely the subject of an application. An application does not guarantee registration.

In Finland, trade mark rights can also arise through established use. If the network relies on this, ask for evidence and have a specialist assess it: neither the existence nor the extent of such rights will be apparent from a register extract. A company’s trade name or domain name alone does not establish that its right to use a trade mark is secure either.

2. Trace the entire licensing chain

The party you contract with may not own the trade mark. The owner could be a parent company, a separate rights-holding company or an overseas franchise business. A franchisor operating in Finland may obtain its rights under a master franchise or licence agreement. This structure is not inherently problematic, but its authority to grant you rights must be verified.

Ask for documentary evidence that your contractual partner is entitled to license the trade mark to your business. If confidentiality prevents disclosure of the full underlying agreement, request the relevant extracts or written confirmation from the rights holder. At a minimum, establish:

• whether the rights cover Finland and your planned business activities;
• whether the franchisor may grant sublicences;
• how long the underlying licence lasts;
• on what grounds it can be terminated;
• what happens to franchisees’ rights to use the mark when it ends.

Compare the duration of the underlying rights with the term of your own agreement. If your business is offered a contract that runs beyond the franchisor’s current rights, ask for a written explanation of how continuity will be secured. Simply expecting the underlying agreement to be renewed leaves a significant risk unresolved.

Also ask about pending oppositions, applications for invalidity or revocation, and infringement disputes. A registration certificate alone does not establish that no claims have been made against the mark. If your due diligence has taken a long time, ask for the position to be reconfirmed before signing.

3. Understand Finland’s legal framework

Finland has no specific franchising act and no mandatory system for registering franchise agreements. Nor is there a statutory franchise disclosure document in a prescribed format. This does not, however, remove duties of disclosure and good faith during contract negotiations or permit misleading claims.

The Finnish Trade Marks Act governs national trade mark protection and rights relating to the use of marks. EU trade marks are governed by the EU Trade Mark Regulation. The Finnish Contracts Act affects the validity of agreements and the possible adjustment of unfair terms. The Unfair Business Practices Act prohibits, among other things, false or misleading statements under the conditions laid down in that Act. The Finnish Competition Act and EU competition rules also place limits on restrictive provisions in agreements.

The Finnish Franchising Association’s Code of Ethics is a form of industry self-regulation to which its members commit. It is not law, nor does membership amount to official approval of an individual network’s trade mark rights. You should therefore check those rights separately even when dealing with a member network.

Recording a trade mark licence in a register is different from registering a franchise agreement. Ask a specialist whether recording the licence would be appropriate in your circumstances. An entry in the register does not remedy a defective agreement or give the licensor rights it does not hold.

4. Agree responsibilities if you can no longer use the mark

Make sure the agreement or a schedule identifies the permitted brand identifiers and the limits on their use. Address not only business premises but also websites, social media accounts, advertising, packaging and locally produced materials. Establish which uses require prior approval and who must give it.

Negotiate a written assurance from the franchisor that it is entitled to grant the agreed rights. Also specify who is responsible for maintaining and renewing registrations. The franchisee’s obligation to follow brand guidelines should not be the only clearly defined responsibility.

The agreement should settle three practical questions in advance:

1. Handling disputes: whom must the franchisee notify of a claim, who controls the defence, and who bears the costs?
2. Keeping the business operating: what happens if use of the mark is prohibited or the right to use it ends?
3. Financial consequences: who pays, for example, to replace signage and packaging, and when is the franchisee entitled to a reduction in fees, damages or termination of the agreement?

These remedies are not automatically available to franchisees: responsibilities must be assessed under the law and the agreed terms. Before negotiating, calculate what removing and replacing the brand identifiers would cost your own business.

Practical checklist: obtain the registration records, verify an unbroken licensing chain and agree in writing what happens if you can no longer use the mark. Have any unclear rights assessed by a lawyer specialising in trade marks before committing.