Buying a franchise: checking trade mark rights

Joining a franchise network gives you access to a brand, including the trade mark that will appear on your premises, marketing materials and digital channels. But a familiar name or a polished logo does not prove that the franchisor holds all the necessary rights. Before investing, check that your future business will be able to use the trade mark on the terms promised.

1. Identify the trade mark and its actual owner

Start by asking for precise details of the trade marks you will use: registration number, owner, filing date, geographical coverage and the goods or services covered. Distinguish between a word mark, consisting of the name, and a figurative or combined mark, which may protect a particular logo.

A company name, a trading name and a trade mark are not interchangeable. Registering a company under the network’s name does not, in itself, prove that the company owns a registered trade mark.

Check the databases of France’s National Institute of Industrial Property (INPI) and, depending on the protection claimed, those of the European Union Intellectual Property Office (EUIPO) or the World Intellectual Property Organization (WIPO). An EU trade mark can cover France; an international trade mark registration must be assessed by looking at the territories designated and the status of its protection.

Compare the results with the contractual documents:

• Is the owner actually the company named in the documents?
• Is the trade mark registered, rather than merely the subject of an application?
• Does its status show that it has expired or is subject to any particular proceedings?
• Do the name and logo match those you will be required to display?

Filing an application does not mean registration has been secured. If an application is still pending, clarify the consequences of a possible refusal before spending money on signage.

2. Check the chain of authorisations

The franchisor does not necessarily own the trade mark. It may belong to a holding company, a founder or an overseas business. This arrangement is not unusual, but the franchisor must hold the rights needed to allow the use it is promising you.

Ask for relevant evidence of its licence or authorisation. In particular, check that it can authorise franchisees to use the trade mark in France. Permission to use it solely for its own outlets does not necessarily establish that right.

Also examine how long that authorisation lasts. If the franchisor’s licence expires before your agreement ends, ask on what basis your rights will continue. Reassuring sales talk is no substitute for a contractual provision you can verify.

France has no single statutory regime governing franchise agreements in their entirety. General contract law, competition law and the French Intellectual Property Code apply, among other rules. Pre-contractual disclosure is governed by Articles L. 330-3 and R. 330-1 of the French Commercial Code, under the framework commonly known as the ‘Doubin Law’.

Where the conditions in Article L. 330-3 are met, the pre-contractual disclosure document and draft agreement must be provided at least twenty days before signing or making any required advance payment. Article R. 330-1 requires, among other things, information about the trade mark and, where it has been acquired or licensed, the corresponding entry in the national trade marks register. Use these disclosures as the starting point for your checks.

3. Compare the protection with your actual business activities

A trade mark does not automatically protect every type of activity. Its registration specifies particular goods and services, organised into classes. The class number alone is not enough: you must also examine the detailed wording of the specification.

Compare that scope with your actual plans. For example, a concept combining product sales, on-site services and training calls for a review covering all those activities. A mismatch does not, on its own, mean that you cannot operate, but it does warrant specialist analysis.

Next, clarify which uses the agreement permits: signage, packaging, vehicles, a local website, social media accounts or marketing campaigns. Ask who approves materials and who owns any domain names or accounts created for your outlet.

The aim is not to secure unlimited freedom over design. It is to know exactly which uses are permitted and which require approval, so that you avoid spending money on materials you cannot use or using the trade mark without authorisation.

4. Plan for a challenge to the rights

Ask whether the trade mark is subject to an opposition, an application for invalidity or a dispute that could affect your business. A register search is no substitute for a full legal assessment of its availability and validity.

The agreement should specify who must be notified if a claim is made, who manages the defence and how costs are shared. Do not assume that the franchisor will automatically cover all your costs.

Also plan for the possibility that you can no longer use the trade mark: replacing signage, updating materials, informing customers and potentially interrupting business operations. Have a lawyer or an industrial property attorney examine the protections offered and their limitations.

Key takeaway: before signing, bring together three consistent elements: evidence of the trade mark rights, proof that the franchisor is authorised to grant you those rights, and an agreement defining your permitted uses and the consequences of any challenge.