Buying a franchise: check the trade mark rights

A recognisable brand does not prove that the franchisor can legally grant you the right to use it. Before investing in signage, packaging and advertising, you need to establish exactly which trade mark you will be using and under what licence. Within a franchise network, these checks protect both your investment and the consistency of the shared brand identity.

1. Distinguish the business name from the protected trade mark

A company's registered name, its trading name, a website name and a registered trade mark are not the same thing. A name appearing in company documents or on a website is not enough to establish registered trade mark rights for the goods or services you will offer.

Ask for a specific list of the trade marks covered by the licence. For each mark, your due diligence file should include:

• Its exact wording or visual form.
• The application or registration number and the relevant register.
• The name of the registered owner.
• The geographical scope of protection.
• The goods and services it covers.
• Its registration status and expiry or renewal dates.

A national trade mark registered in another country does not, on its own, provide protection in Greece. Likewise, an EU trade mark or an international registration needs to be checked for validity and scope of protection. A pending application is not a completed registration: ask for this distinction to be made clear before assessing the investment.

2. Check the licensing chain

The franchisor does not necessarily have to own the trade mark. It may use it under licence from another company and have the right to grant sublicences. The key question is not just ‘Who owns it?’ but also ‘What authorisation will allow me to use it?’

If the trade mark owner is not the party you are contracting with, ask for evidence of the licensing chain. Your lawyer should be able to confirm that sublicensing to franchisees in Greece is permitted for the specific activities and the agreed term.

A general assurance that the companies ‘belong to the same group’ is not enough. Check whether the main licence expires before your own agreement, whether it can be revoked and what provisions apply to franchisees if that happens. Where confidential information is involved, an appropriate extract or controlled access for your legal adviser may be an option.

Also ask for written details of any pending oppositions, applications for a declaration of invalidity, litigation or third-party claims affecting use of the trade mark. A dispute does not automatically mean you should reject the investment, but it needs to be assessed before you commit.

3. Understand the Greek legal framework

Greece has no dedicated law comprehensively governing franchise agreements, no specific register of franchisors and no mandatory standardised pre-contractual disclosure document. This does not mean that the relationship operates without rules.

The general provisions of the Greek Civil Code on contracts and obligations apply. At the pre-contractual stage, Articles 197 and 198 address good faith in negotiations and liability for harm caused through fault. Concealing a material problem with the trade mark may give rise to liability, depending on the circumstances.

Law 4679/2020 provides the main Greek legislative framework for trade mark protection. EU trade marks are governed by the corresponding EU framework. Licences and contractual restrictions are also assessed under the applicable competition rules.

A business's registration with Greece's General Commercial Registry (GEMI) is no substitute for checking its trade marks. Ask a specialist lawyer to conduct an independent search of the relevant registers and assess the documents, rather than simply reading the franchise network's brochure.

4. Agree what happens if a problem arises

Your checks should lead to clear contractual terms. The agreement or its schedule needs to identify the licensed trade marks, the permitted uses and the franchisor's obligation to maintain the necessary authorisation.

Specifically negotiate who will take responsibility for the defence if a third party challenges the lawful use of the trade mark. Set out a notification procedure, arrangements for handling formal legal notices and the allocation of legal costs. Do not assume that you will be compensated: this requires a specific contractual provision and a legal review of its limits.

Also consider the practical consequences of rebranding if trade mark rights are lost. Who pays for new signage, replacement packaging, website changes and customer communications? What happens to materials already purchased that can no longer be used? Record the cost categories and the agreed allocation of responsibility, rather than relying on a vague promise of support.

Practical takeaway: before paying any money, secure three things: confirmation of the trade mark's status, evidence of the right to license it to you and a clear allocation of responsibility if lawful use is interrupted.