Franchising: checking trade mark ownership and protection

Before joining a franchise network, recognising the name above the door is not enough: you need to check who can authorise its use and on what terms. A pending registration application, a licence nearing expiry or a trade mark dispute could affect your investment. The aim is to establish that the branding you will use at your premises is backed by documented rights covering your planned activities and territory.

1. Ask for documents identifying the trade mark

In Italy, franchising is governed by Law No. 129 of 6 May 2004, on commercial franchising. Article 4 requires the franchisor to provide a complete copy of the contract and the supporting documents required by law at least thirty days before signing. These must include details of the trade marks used in the franchise system, with registration or filing particulars, details of any licence granted to the franchisor by the owner, or documentation demonstrating actual use of the trade mark.

Do not assume that the franchisor also owns the trade mark, or that every mark presented to you is already registered. Ask for a fact sheet for each trade mark you will use, setting out:

• the name and a representation of the mark, distinguishing between the name and the logo;
• the owner, application or registration number, and relevant dates;
• the territories covered and the goods or services concerned;
• the status of the application or registration and any renewals;
• the legal basis on which the franchisor can authorise franchisees to use it.

A sales presentation or a registration symbol beside the logo is no substitute for these checks. Nor does an internet domain registered in the franchisor’s name, on its own, prove ownership of the trade mark.

2. Check registration, territory and the activities covered

Trade mark law in Italy is governed by the Industrial Property Code, Legislative Decree No. 30 of 10 February 2005. Regulation (EU) 2017/1001 also applies to European Union trade marks. These rules are separate from franchising law: they help establish the rights in the mark that the contract allows you to use.

Cross-check the documents you receive against the official databases of the Italian Patent and Trade Mark Office (UIBM), the European Union Intellectual Property Office (EUIPO) and, where relevant, the World Intellectual Property Organization (WIPO). The trade mark does not need to appear in all of them: this depends on the route chosen to secure protection. For an international registration, you also need to check the designated territories and the status of protection relevant to Italy.

Pay particular attention to the actual list of goods and services, not just the class numbers. A trade mark registered for certain goods does not automatically provide the same coverage for every service offered under that brand.

Also check that the logo intended for your shop matches the documented marks. If the marketing materials use a newer version, ask how it is protected. Registration does not rule out every possible challenge: if you have concerns, an industrial property adviser can assess earlier rights and conflicts that a simple name search may not reveal.

3. Establish the franchisor’s right to authorise your use

If the owner is a different company from the franchisor, even within the same group, you need to understand what arrangement authorises use of the trade mark. A corporate connection alone does not establish the power to grant franchisees permission to use it.

Ask for documentary evidence addressing the points that affect your position:

• does the licence allow use through a franchise network?
• does it cover Italy and the activities you will carry out?
• when does it expire, and how can it be terminated?
• what would happen to your contract if the licence ended?

The right to pre-contractual information does not automatically mean an unrestricted right to obtain every internal document. If confidentiality is cited, agree with your legal adviser which extracts or confirmations would be sufficient to verify the franchisor’s authority.

One situation requiring closer scrutiny is a licence that expires before the proposed franchise agreement ends. This does not necessarily make the arrangement unworkable, but a general promise of renewal does not explain how you will be protected if that renewal does not happen.

4. Establish what happens if the trade mark is challenged

Before signing, check who will handle any cease-and-desist letter or legal proceedings concerning authorised use of the trade mark. The contract should explain how to report a challenge, who will co-ordinate the defence and which costs each party must bear.

Also ask how any ban on use or change of branding would be handled: who pays for new materials, packaging, clothing and digital updates? Is any protection provided if trading is interrupted? The answers need to be negotiated and documented; do not assume that reimbursement will be automatic.

Finally, distinguish between problems with the rights to the trade mark and breaches committed by the franchisee, such as unauthorised changes to the logo: liability and remedies may differ.

In practice: before investing in the brand, have three elements checked together: the trade mark, the franchisor’s authority to license its use, and your contractual protections if that right is lost.