Trade Mark Rights and Rebranding Terms to Check Before Joining a Franchise in Japan

When joining a franchise, the conditions under which you can use its name matter as much as its reputation. Even within a franchise network where the franchisor and franchisees share a brand, trade mark rights and responsibility for its use are distinct. Before signing, identify the documents and answers you need so that restrictions or ownership issues do not come to light only after you have put up your signs.

First, establish whose trade mark you will use and who authorises its use

A brand name appearing in recruitment materials does not necessarily mean that the company you are contracting with can license its trade mark. The franchisor may own the rights itself, or it may hold a licence from a parent company or another business. A difference between the rights holder and the franchisor is not inherently a problem, but you need to check that the arrangements properly authorise franchisees to use the mark.

Ask the franchisor for a list of the names and logos you will use, along with the following information:

• The trade mark registration number, the rights holder’s name and the current registration status
• The goods and services covered by the registration, and how these relate to your planned business
• If the franchisor is not the rights holder, the basis on which it can license use to franchisees
• If a mark is described as having an application pending, the application’s status and what will happen if registration is refused

You can check trade mark application and registration information on J-PlatPat, Japan’s official patent information platform. However, simply finding a name in a search is not enough. Words and graphic elements may have separate registrations, and the goods or services covered may differ. If the position is unclear, ask a Japanese patent attorney to review the registration numbers alongside your plans for the outlet.

If the franchisor holds a licence from another company, also ask what happens if that underlying licence ends. If it is unclear whether you could lose the right to use the brand during your franchise agreement, or what would happen in that event, seek an explanation before committing to a long-term investment in premises.

Understand the distinction between Japan’s disclosure rules and trade mark rights

Japan does not have a single comprehensive law governing all franchise agreements uniformly. However, Article 11 of the Act on the Promotion of Small and Medium-sized Retail Business requires franchisors whose operations qualify as a ‘specified chain business’ under the Act to provide prospective franchisees with written information and an explanation before contracting. The required disclosures include information about the trade marks, trade names and other identifiers to be used.

Whether these requirements apply depends on the substance of the business and contract, not on whether the business calls itself a franchise. Nor does the inclusion of a brand name in a disclosure document amount to an official guarantee that there are no issues with the trade mark rights. You still need to cross-check the disclosures against the rights information.

The Japan Fair Trade Commission’s guidelines on franchise systems under the Antimonopoly Act apply to franchises generally, not just retail and food service businesses. They address disclosure during franchise recruitment and conduct that may raise concerns in dealings between franchisors and franchisees. Do not assume that a franchisor has no need to explain matters simply because it falls outside the statutory disclosure requirements.

The Trade Mark Act governs issues such as trade mark protection and infringement, while the Civil Code and other laws are relevant to contractual rights and obligations, including licensing. A franchisee is a business operator independent of the franchisor. Use the disclosure framework, but also check that the contract secures the rights you actually need.

List the uses you need beyond signage

A clause simply stating that you may ‘use the brand’ does not tell you how far that permission extends in day-to-day trading. You may be allowed to display the outlet’s name but need approval to use it in your own advertising, distance selling or social media account names. List your intended uses after opening and check them against the agreement and brand usage rules.

Where the brand will be used	What to check before signing
Signs, uniforms and packaging	Required designs and suppliers, and whether changes are permitted
Leaflets and local advertising	Whether prior approval is required, how to apply and the deadline for a response
Outlet webpages and social media	Permitted uses of names, logos and photographs, and approval conditions
Delivery, distance selling and events	The extent to which the brand may be used outside the outlet
Your own products or services	The conditions for offering them under the brand name

For approval procedures, establish not only whether approval is needed but also who handles requests, what you must submit and the usual response time. If approval has not arrived by an advertising deadline, money already committed to production could be wasted. Do not assume that silence means consent: clarify the position in advance.

On costs, check whether payment for using the trade mark is included in royalties or whether separate licence fees or design review fees apply. Rather than focusing on what each fee is called, record what triggers it, who charges it and when it becomes payable. This makes comparisons easier.

Agree what happens, and who pays, if the brand can no longer be used

Even if there are no problems when you join, the name or logo may change during the contract term. A change driven by the franchisor’s business policy is different from one prompted by a third-party allegation of infringement. Check whether the agreement treats both situations under a single clause without distinguishing between them.

The key points are how much notice you receive, how long you have to make the change and who bears the costs. Consider not only replacement signs but also discarded packaging, new uniforms, replacement advertising and updates to outlet webpages. Even if the amounts cannot yet be calculated, the contract can still set out the principles for allocating costs and the procedure for approving them in advance.

Ask the franchisor the following questions about any warning received from a third party:

• Whom should the franchisee contact, and what investigation and response will the franchisor undertake?
• Who bears the costs if the franchisee has used the specified branding exactly as instructed?
• How will legal fees and the costs of removing or replacing branding be handled?
• If use of the brand must stop, how can the outlet continue trading, and what payment obligations remain?
• What options can be discussed if there is no clear prospect of resuming use?

Be wary both of clauses that exempt the franchisor from all responsibility and of assuming that it will be responsible even for branding you have altered independently. Specify who will deal with which actions and circumstances. A Japanese patent attorney can help clarify trade mark rights, while a lawyer can advise on contractual liabilities and remedies.

Practical takeaway: Before signing, bring together three things: information on the trade mark rights, the scope of permitted use, and the arrangements and costs if use becomes impossible or the brand changes. Base your decision not just on how well known the name is, but on whether you have secure rights to use it for your planned business.