Buying a franchise: checking trade mark rights

Buying a franchise means joining a community of entrepreneurs and acquiring, among other things, the right to use a trade mark. But a recognisable brand does not prove that it has robust legal protection or that the franchisor has the authority to let you use it. Before signing, check that this right actually covers your business activities, your location and the full term of your commitment.

1. Identify the trade mark you will actually use

Start by asking the franchisor for the exact details of the trade marks you will be entitled to use: registration numbers, owners, territories covered and specified goods or services. Also ask which versions you will be required to use: the name alone, the logo, the strapline or a combination of these elements.

A company name, a domain name and a trade mark involve distinct rights. Registering a company is not a substitute for registering a trade mark. Likewise, owning a website does not guarantee that its name can be used without challenge.

Consult the official databases of France’s National Institute of Industrial Property (INPI). Depending on the protection claimed, extend your search to the European Union Intellectual Property Office (EUIPO) or the World Intellectual Property Organization (WIPO). An international trade mark does not automatically protect its owner in every country: you need to check the territories designated.

Keep a dated copy of the records you consult. In particular, check:

• whether the trade mark application is still pending or the mark is already registered;
• whether the registered owner is the party identified by the franchisor;
• whether its protection covers France;
• whether the specified goods and services match your business activities;
• whether the register records any events affecting the trade mark rights.

Class numbers provide a useful guide, but the precise wording of the goods and services specification is what matters. A search for identical marks alone is also insufficient to rule out all earlier rights.

2. Establish the franchisor’s authority to grant you use of the trade mark

The franchisor does not necessarily own the trade mark. It may belong to a group company, a founder or a third party that licenses it to the franchisor. This arrangement is not unusual, but the chain of authorisations must be clear.

Ask for documentary evidence that the franchisor can grant you the use provided for in the contract. If there is a licence, have its duration, territorial scope, covered activities and provisions allowing franchisees to use the trade mark checked. A general statement of authorisation is not always a substitute for your legal adviser examining the relevant provisions.

In France, the pre-contractual framework is based in particular on Article L. 330-3 of the French Commercial Code, introduced by the Doubin Law, and Article R. 330-1. Where the conditions for these provisions to apply are met—notably where a trade mark, trade name or trading sign is made available in return for an exclusive or near-exclusive commitment—the pre-contractual disclosure document and draft contract must be supplied at least twenty days before signing or any required advance payment.

Article R. 330-1 requires, among other things, information about the trade mark’s registration and, where it has been assigned or licensed, the corresponding entry in the register. This information is a starting point, not a guarantee that there are no disputes. Trade mark protection and use are also governed by the French Intellectual Property Code and, for an EU trade mark, the applicable EU law.

3. Assess the security of the rights over time

Compare the term of your contract with the expiry dates of the trade mark protection and any licence granted to the franchisor. A registered trade mark can be renewed, so an approaching expiry date is not, in itself, a warning sign. However, establish who is responsible for renewal and how the contract safeguards your ability to continue trading.

Ask the franchisor in writing about any oppositions, applications for invalidity or revocation, infringement proceedings and coexistence agreements that could restrict your use. A registered trade mark can still be challenged. In particular, a lack of genuine use for an uninterrupted period of five years may expose it to revocation, subject to the applicable legal conditions.

Also ask whether any changes to the name or logo are already planned. A change may involve expenditure on shopfronts, signage, packaging and digital materials. Make sure a voluntary brand refresh is distinguished from a change forced by a legal problem.

4. Allocate responsibilities before signing

The contract should specify the permitted uses: shopfronts, local advertising, websites, social media, vehicles or business documents. Also check the rules for creating and managing digital accounts bearing the trade mark.

Have the contractual provisions examined for three practical scenarios: a third party challenges your use of the brand, the franchisor loses its right to use the trade mark, or a rebrand becomes necessary. Who takes charge of the defence? Who pays the costs? What arrangements would allow the business to keep operating? What remedies are available if continued operation becomes impossible?

Do not assume that all your costs will automatically be reimbursed. Ask a lawyer with expertise in franchising and intellectual property to clarify the obligations, exclusions and any limits on liability.

Key takeaway: before committing, obtain the official trade mark details, evidence of the franchisor’s authority and contractual provisions addressing the consequences of a challenge. A franchise community also depends on verifiable rights to use its brand.