Buying a franchise: make sure you have the right to use the trade mark

When you join a franchise network, you also pay for the right to trade under an established name and a consistent visual identity. You should therefore check your rights to use the brand just as carefully as any other requirement for running the business. A logo on the cover of the agreement does not prove that the franchisor can grant your business all the rights it needs. Before signing, establish what you can use, through which channels and for how long.

1. Establish the basis of the network’s rights to the brand

Ask the franchisor for a list of the trade marks your business will use. Ideally, it should identify at least the word marks and figurative marks, their owners, registration numbers, the territories in which they are protected, and the goods or services covered. A company name, a domain name and a registered trade mark are not the same thing. Control over one does not automatically establish rights to the others.

Check the registration details with the Finnish Patent and Registration Office (PRH) and, where necessary, the European Union Intellectual Property Office (EUIPO). Protection in Finland may arise, for example, from a national trade mark or an EU trade mark covering the entire EU. For an international registration, check whether protection extends to Finland. The mark’s status also matters: an application is not the same as a registration.

In Finland, trade mark rights can also arise through established use. If the network relies on this rather than registration, ask for evidence of the basis of those rights and an expert assessment of its significance. Do not assume that the scope of the rights is undisputed simply because a name has been used for many years.

If the trade mark belongs to a company other than the one you are contracting with, ask for a written explanation of the licensing chain. The franchisor must have the right to let franchisees use the mark. It may not be possible to disclose the entire underlying agreement, but the key rights, restrictions and duration should be verifiable, for example through an extract from the agreement.

2. Define your business’s usage rights in practical terms

A general statement in the agreement granting the right to use the network’s brand can easily leave everyday situations unresolved. Before signing, list where your business will need to use the name, logo and other brand assets. Compare that list with the rights granted in the agreement and the network’s guidelines.

Check at least the following uses:

• premises signage, window graphics and staff uniforms
• websites, online shops and booking services
• social media accounts and local business profiles
• packaging, receipts, quotations and customer communications
• advertisements and materials produced by an external designer or printer.

Establish which materials will be supplied ready to use and which your business may produce itself. Agree on the approval process too: who you should ask for permission, what materials you need to submit and how approval will be recorded. This helps distinguish permitted uses from those requiring separate consent.

For domain names and user accounts, record separately who will register them and who will have administrative access. A licence to use a trade mark does not, in itself, determine control over accounts. An unclear arrangement could prevent you from updating local opening hours or contact details, even where use of the brand itself is permitted.

Also ask for confirmation that your rights cover all the products and services you plan to offer under the agreement. A well-known name in one product category does not, on its own, prove that either the protection or the franchisor’s permission covers everything your business will do.

3. Check continuity and responsibility in a legal dispute

Your usage rights should support the agreed business activities throughout the franchise agreement. If the franchisor’s own rights depend on a fixed-term licence, check how its duration compares with your contract term. Also ask what happens if the underlying licence ends or the trade mark changes ownership.

Ask for a written response confirming whether the mark has faced oppositions, invalidity claims or infringement allegations, and whether the franchisor is aware of any unresolved disputes. Checking the register is important, but it will not reveal every potential disagreement. The key is to understand whether any known issue could jeopardise your planned use.

The agreement should set out what happens if a third party demands that your business stop using the mark. Who do you notify of the demand? Who obtains legal advice and takes responsibility for handling the matter? Who bears the costs of defending the claim if you have used the mark exactly as approved by the network?

Distinguish this from a franchisee’s own use in breach of the guidelines. Responsibility may be allocated differently if a franchisee alters a logo without permission or uses it on products outside the scope of the licence. Keep records of approvals and the versions of materials used. Do not assume the network will automatically handle every claim: negotiate an explicit procedure and allocation of costs.

4. Understand the different roles of the law and the agreement

Finland has no dedicated franchising act, mandatory registration system for franchise agreements or statutory standard-form franchise disclosure document. This does not mean that brand use is unregulated. Finland’s Trade Marks Act governs trade mark rights, while EU trade marks are subject to the EU Trade Mark Regulation.

Finland’s Contracts Act and Unfair Business Practices Act are also relevant to the contractual relationship. Misleading pre-contractual information does not become acceptable simply because Finland has no specific franchise disclosure law. Competition law may also affect the assessment of restrictions attached to usage rights.

The Finnish Franchising Association’s Code of Ethics is a form of industry self-regulation, not law. Check whether the franchisor is committed to it, but do not treat that commitment as a substitute for checking the trade marks or the agreement. Nor is the possibility of having an unreasonable contract term adjusted a substitute for agreeing clear terms at the outset.

Before committing, have a lawyer familiar with franchise agreements and trade marks assess any unclear ownership or licensing arrangements. Practical checklist: confirm the rights holder, verify the franchisor’s authority to grant a licence, and record your business’s permitted uses and the procedure for handling a legal dispute.