Buying a franchise: checking trade mark rights

When you join a franchise network, you are also investing in its brand recognition. A familiar shop sign, however, does not prove that the company offering you a franchise has the right to let you use it. A focused check of trade mark registration and the licensing chain can help prevent costly rebranding, business interruptions and litigation.

1. Identify the trade marks you are actually paying to use

Ask the franchisor for a list of the trade marks included in the arrangement: the name, logo and any separate product or service names. For each mark, you need the application or registration number, the owner, the territory covered, the classes of goods and services, and its current status.

An application is not the same as a completed registration. Nor does registering a company name with Greece’s General Commercial Registry (GEMI), or owning a domain name, replace trade mark protection.

Your checks must establish protection in Greece. This may come from a Greek national trade mark, a European Union trade mark or an international registration effective in Greece or the European Union. Registration solely in a country outside the EU is not, by itself, sufficient.

Also compare the protected activities with your actual business plan. A trade mark covering particular products does not automatically cover every service your outlet will provide. Ask a lawyer experienced in trade marks to assess the scope of protection, rather than simply confirm that a registration number exists.

2. Trace the chain of rights through to the franchisor

The trade mark owner is often not the company signing the franchise agreement. It may be a parent company, a founder or an overseas business that has granted development rights in Greece. This is not necessarily a problem, but it needs to be documented.

Ask for written confirmation of:

• The relationship between the trade mark owner and the franchisor entering into the agreement.
• The validity of the licence for the Greek market.
• The franchisor’s right to grant sublicences to franchisees.
• The duration and any material restrictions on that authorisation.
• The consequences for you if the underlying licence ends.

You will not always need a complete copy of a confidential agreement between third parties. Your legal adviser does, however, need sufficient evidence, such as relevant extracts or confirmation from the owner, to verify the authorisation.

For example, if your franchise arrangement is intended to last longer than the franchisor’s existing licence, ask for an explanation and provisions in the agreement to address this. An expectation of renewal is not the same as a secured right to use the mark.

3. Understand the Greek legal framework

Greece has no dedicated law providing a comprehensive framework for franchising, nor a specific statutory requirement for a pre-contractual disclosure document. The general principles of the Greek Civil Code, relevant commercial rules, and laws on unfair competition and competition apply.

Articles 197 and 198 of the Civil Code concern good faith in negotiations and liability for loss caused by culpable conduct at that stage. They do not establish a standardised list of documents for every franchise arrangement. However, concealing a material problem with trade mark rights may have legal implications, depending on the circumstances.

The principal legislation governing Greek national trade marks is Law 4679/2020. European Union trade marks are governed by Regulation (EU) 2017/1001. Check the relevant registers for ownership, renewals and any recorded pending proceedings. Also request a written statement covering known oppositions, applications for invalidity or revocation, and related litigation.

The European Code of Ethics for Franchising provides for full and accurate written disclosure of material information within a reasonable time before signing. It is a self-regulatory code, not a Greek law of general application. Check whether the franchisor is bound by it through membership of an association or a reference in the agreement.

4. Translate your findings into specific contract terms

The agreement should identify which trade marks you may use and for which activities. Check whether the licence covers signage, packaging, your website, social media and local promotional materials, and what approvals are required.

Negotiate clear obligations for the franchisor to maintain the necessary rights, notify you promptly of challenges and handle third-party claims. Clarify who takes responsibility for the legal defence and associated costs when you use the mark in accordance with the agreement. Do not assume that compensation is automatic or unlimited without checking the wording and the applicable law.

Also set out what happens if a change of trade mark is required: who pays for new signs, packaging and digital updates, how much time you have to comply, and how any suspension of use will be handled. This turns an abstract legal risk into a specific allocation of responsibilities and costs.

Practical takeaway: before committing, secure three things: verified trade mark protection in Greece, documented authority to grant you the right to use it, and clear contractual provisions setting out what happens if that use is challenged.