Buying a franchise: check trade mark rights before you commit

When you join a franchise network, you are also investing in a shared name. But a familiar logo proves neither that valid trade mark protection exists nor that the party offering you the contract is entitled to grant you the right to use it. Before paying for business fittings, external signage or an initial franchise fee, establish which trade marks you may use in Germany, for which products and services, and on what legal basis.

1. Identify the trade mark precisely in the register

Ask the franchisor for a complete list of the trade marks you will be expected to use. This should include registration numbers, the respective owners, and the goods and services covered. In particular, distinguish between a word mark protecting the name and a combined word and figurative mark protecting a particular graphic design. A registration does not automatically protect every possible variation of the branding.

The following registers are particularly useful for an initial check:

• DPMAregister: for German trade marks registered with the German Patent and Trade Mark Office.
• The EUIPO trade mark register: for EU trade marks, whose protection generally extends to Germany.
• WIPO databases: for international registrations; check whether protection actually covers Germany or the European Union and what its current status is.

Compare the register entries with the draft contract. Do the name, registration number and owner match? Is the trade mark registered, or has an application merely been filed? Are there indications of opposition, cancellation or other proceedings? When is the next renewal due?

The specification of goods and services is also crucial. A trade mark covering clothing does not automatically cover restaurant services. The class number alone is not enough: read the specific goods and services listed.

Important: A register search provides a snapshot, not comprehensive legal clearance. In particular, it does not conclusively establish whether earlier third-party rights could prevent use. If anything is unclear, seek advice from a trade mark specialist.

2. Ask for evidence of the franchisor’s authority

The franchisor does not have to own the trade mark itself. The rights may, for example, belong to a parent company. A German master franchisee acting as your franchisor may also derive its authority from a trade mark owner abroad. What matters is a verifiable licensing chain that grants sufficient rights.

Request appropriate evidence. Confidential underlying agreements do not necessarily have to be disclosed in full; meaningful extracts or confirmations may substantiate the relevant points. However, a simple statement that the trade mark belongs to “the group” is not a sufficient basis for your checks.

Obtain written clarification of the following:

• Is the party entering into the contract with you expressly authorised to grant sublicences to franchisees?
• Does that authority cover Germany and your intended business activities?
• Does it cover the planned duration of your use?
• Are shop signage, websites, social media and local advertising included?
• What approvals or restrictions apply to particular forms of use?

A typical issue to check is whether the draft contract allows you to run your own local website while the underlying licence reserves digital uses to the trade mark owner. This discrepancy must be resolved before you make a binding commitment. The fact that other members of the franchise network already use the brand in a similar way is no substitute for evidence of authorisation.

3. Understand disclosure duties and the legal framework

Germany has no dedicated franchise act and no government franchise register. Nor is there a legally prescribed, standardised disclosure document specifically for franchise offers. A trade mark registration therefore does not mean that the franchise offer has been assessed or approved by the state.

During contract negotiations, the relevant rules include the pre-contractual duties to protect and have regard for the other party’s interests under sections 311(2) and 241(2) of the German Civil Code (BGB), supplemented by the principle of good faith under section 242 BGB. Their precise scope is shaped by case law. Material circumstances relevant to the decision to enter into the contract must not be presented misleadingly or withheld in breach of a disclosure duty. These may include a lack of authority to grant licences or significant disputes over the core trade mark.

There is no fixed statutory disclosure period specifically for franchise agreements. Request the documents early enough to allow a proper review before you become bound — including by a binding preliminary agreement.

German trade marks are governed principally by the German Trade Mark Act, while EU trade marks are governed by the EU Trade Mark Regulation. Standard contract terms are also subject to scrutiny under sections 305–310 BGB, with particular rules applying to business-to-business dealings. Industry association codes can offer guidance, but they replace neither these laws nor a review of the contract.

4. Address trade mark rights and resulting costs in the contract

Translate the findings of your checks into clear contractual provisions. A schedule should identify the key trade marks and clearly define the scope of your right to use them. The contract should also state who is responsible for maintaining the rights, arranging necessary renewals and informing you of relevant legal disputes.

In particular, discuss who will organise the defence if you receive a formal legal warning alleging infringement arising from the agreed use of the trade mark, and under what conditions costs will be covered. Also clarify who will pay for new signs, printed materials or digital changes if a legal dispute makes rebranding necessary. A general promise of “support” does not answer these questions.

Keep dated copies of register extracts, evidence of licences and written answers. If discrepancies remain unresolved, postpone any binding commitment and significant expenditure tied to the brand. A breach of disclosure duties may, among other remedies, give rise to a claim for damages under section 280(1), read together with sections 311(2) and 241(2) BGB; whether the requirements are met must be assessed in each individual case.

Practical takeaway: Before joining, check three things: trade mark protection, an unbroken chain of authority permitting your use, and contractual responsibility if problems arise. Only when all three align will your use of the shared brand rest on a sound legal footing.