Franchising in Guatemala: check the trade mark licence

Buying a franchise means paying to use a trade mark, but a brand’s reputation does not prove that the business offering it can authorise its use in Guatemala. Before investing in signage, packaging or advertising, verify the rights underpinning that authorisation. In franchising, these checks protect both your investment and business continuity.

1. Check the trade mark’s protection in Guatemala

Ask the franchisor for the registration details of every trade mark you will use: the name, logo and, where applicable, other distinctive signs. Request documents identifying the owner, registration number, goods or services covered, and period of validity.

Registration of a trade mark in another country does not, on its own, demonstrate protection in Guatemala. Instruct a local lawyer to verify its status with the Intellectual Property Registry (Registro de la Propiedad Intelectual, or RPI). Do not rely solely on an image of the certificate: you need to know the current status of the rights and any circumstances that could affect use of the mark.

Check the documentation against what your outlet will actually sell:

• Does the registration cover the name and logo shown in the commercial proposal?
• Are the protected goods or services relevant to your planned business activities?
• Who is listed as the owner, and does this match the contractual documentation?
• Are there pending applications, upcoming renewals or disputes you should assess?

A pending application is not the same as a granted registration. If the proposal depends on a trade mark whose registration is still pending, ask for an explanation of the risk and agree what will happen if protection is not secured before committing to expenditure that would be difficult to recover.

2. Trace the chain of authorisation through to your business

The franchisor does not necessarily have to own the trade mark: it may hold a licence allowing it to authorise third parties to use it. What matters is verifying that authority, rather than assuming it exists because of the commercial relationship between the companies.

If the owner and the party you are contracting with are different, request the document linking them. A copy may be provided with information unrelated to the transaction redacted, but you must still be able to verify the relevant powers, territory, duration and restrictions.

The Industrial Property Law, Decree 57-2000, governs trade mark licences. Unless otherwise agreed, a licence does not permit sublicensing. Authorisation to use a trade mark is therefore not enough to establish that the licence holder can grant you the same right.

Ask your adviser to cross-check three elements: the owner’s authorisation to the franchisor, the licence you will receive and the period during which you will operate. If the franchisor’s rights expire before your contract does, insist on a documented solution; a promise to renew does not resolve that mismatch.

3. Make the right to use the mark a clearly defined contractual commitment

Guatemala has no specific law comprehensively regulating franchises, nor a special mandatory pre-contractual disclosure regime or general franchise register. The relationship is based primarily on the Commercial Code, Decree 2-70, and the Civil Code, Decree-Law 106; the Industrial Property Law is essential where trade marks are concerned.

The trade mark licence must be in writing. It may be incorporated into the franchise agreement, but it must clearly identify what is authorised. A generic reference to ‘the system’s trade mark’ is not enough if you will be using several names or logos.

Check that the document specifies:

• The trade marks covered and their registration details.
• The authorised goods, services and uses, including relevant digital channels.
• The duration of the rights and how this relates to the franchise agreement.
• The applicable restrictions and quality controls.
• Who will keep the registrations in force and communicate relevant changes.

Recording the licence with the RPI is not a condition of its validity. Nevertheless, seek advice on whether recording it would be advisable in your case, and agree who will handle the process and pay the costs. Do not confuse this recordal with official approval of the franchise business.

4. Agree what will happen if use of the mark is challenged

Before signing, establish how the parties will respond if a third party claims rights to the trade mark. Specify whom you must notify, who will coordinate the defence and who will pay for legal advice. Avoid accepting all responsibility for a dispute over rights you do not control.

Also negotiate the consequences of losing authorisation: replacing signage and packaging, making changes to digital channels, business interruption and how payments for use of the trade mark will be handled. Do not assume these arrangements are in place; they require contractual clauses reviewed by a Guatemalan lawyer.

Practical conclusion: before paying to use a trade mark, obtain three pieces of evidence: protection in Guatemala, the franchisor’s authority to grant you permission, and a written licence covering your operations. If any is missing, resolve the issue before investing in your outlet’s branding.