Franchising your business: securing trade mark rights

Your business trades under a name that is well known locally. That alone does not guarantee that you can authorise franchisees to use it throughout France. Before developing your franchise network, check who owns the trade mark, what it protects and how rights to use it will be granted. This preparation avoids building a network around a brand with an insecure legal foundation.

1. Check what your business actually owns

Start by distinguishing between the registered company name, trading name, business signage, domain name and trade mark. These may all share the same name, but they do not constitute a single legal right. Registering a company or buying a domain name is no substitute for filing a trade mark application.

Gather evidence of filing and registration, then check the current information in the relevant registers, including the register maintained by France’s National Institute of Industrial Property (INPI) for a French trade mark. Your records should answer five questions:

• What is protected: the name, the logo or a combination of the two?
• Who exactly owns the rights?
• Which goods and services are specified?
• In which territory does the protection apply?
• What is the trade mark’s current status, and which deadlines need monitoring?

Do not confuse filing an application with registration. Nor should you assume that a registered trade mark covers every activity within your business concept. Expanding into a new service may require additional protection.

Also have any earlier rights that could prevent use of the trade mark assessed. A search limited to strictly identical names is not enough: similar names or logos may create a likelihood of confusion. An industrial property attorney or lawyer can assess this risk in light of the activities concerned.

2. Establish a chain of rights through to the franchisee

In an existing business, the trade mark may belong to the founder personally, a long-standing operating company or another group company. The future franchisor company does not automatically become its owner.

Two options worth considering are assigning the trade mark to the franchisor or granting it a licence that allows it to use the mark and authorise franchisees to do so. The choice should be reviewed with the business’s legal and tax advisers.

Permission to use a trade mark does not, on its own, guarantee the right to grant sublicences. If the franchisor is not the owner, expressly check whether it has this right, its scope and the conditions attached. Also check that the duration of its own rights is consistent with the term of the agreements it intends to enter into.

For example, a franchisor company authorised to use a trade mark solely for its pilot outlet should not assume that this permission extends to future independently operated outlets.

Keep the signed documents and arrange any registrations needed to make those rights enforceable against third parties. The aim is to be able to demonstrate an unbroken chain of rights from the trade mark owner to each franchisee.

3. Define the right of use precisely

The franchise agreement must set out the right to use the trade mark in writing, for example through licence provisions incorporated into the agreement. Avoid vague wording stating that the franchisee may use “the network’s trade marks” without identifying them precisely.

In particular, specify:

• the trade marks concerned and their identifying references;
• the goods and services for which their use is authorised;
• the territory and duration of the authorisation;
• the permitted physical and digital media;
• the rules for presentation and approval of local adaptations.

Distinguish the territory in which the trade mark may be used from any exclusive commercial territory: these are not interchangeable concepts.

In France, franchise agreements are not governed by a single dedicated statutory regime. They draw on general contract law, competition law and the French Intellectual Property Code, among other rules. Pre-contractual disclosure is, however, regulated by Article L. 330-3 of the French Commercial Code, introduced by the Doubin Law, and Article R. 330-1.

Where the conditions of Article L. 330-3 are met, notably where a distinctive sign is made available alongside an exclusivity or near-exclusivity commitment, the pre-contractual disclosure document (known in France as the DIP) and draft agreement must be provided at least twenty days before signing or any required advance payment. The information about the trade mark must reflect the actual legal position, including where the franchisor derives its rights from a licence.

4. Put long-term protection arrangements in place

Assign a named person to monitor renewals, changes of ownership and permissions granted. Keep an internal register of the trade marks used by each outlet and the approved versions of logos and other visual elements.

Also establish a simple procedure for franchisees who spot an imitation: preserve relevant evidence, alert the franchisor and avoid taking uncoordinated legal action. The agreement can define each party’s responsibilities without automatically promising legal proceedings in response to every report.

Key takeaway: before recruiting franchisees, bring together three consistent elements: verified trade mark rights, a documented chain of rights and a clearly defined contractual licence. Your network can then develop a shared identity on solid foundations.