Franchise Trade Mark Checks: Brand Usage Rights and Dispute Risks Before You Sign

As a prospective franchisee, you are investing not just in signage, but also in packaging, delivery platform listings and the brand recognition built among customers. If the franchisor lacks the authority to let you continue using the brand, that entire investment could be at risk. Before joining a franchise network in South Korea, look beyond brand recognition and establish the legal basis on which the franchisor allows franchisees to use its trade marks. Work through the following documents and terms before signing.

1. Identify the business identifiers covered by the agreement

South Korea’s Fair Transactions in Franchise Business Act treats an ongoing trading relationship that permits the use of business identifiers—such as trade marks, service marks, trade names and signage—as a core element of franchising. Article 11 of the Act requires franchise agreements to include provisions on the use of these identifiers. Do not stop your review simply because the brand name appears in the agreement: establish precisely which identifiers you will be using.

A single brand may have separate Korean and English names, a graphic logo and names for signature products. If the logo in the sales materials differs from the one attached to the agreement, ask which you are authorised to use. Attaching a list and samples of the identifiers to be used at opening makes it easier to establish the scope of permission later.

Start by requesting the following from the franchisor:

• A list and samples of the trade marks and logos covered by the agreement
• The application or registration number and current rights holder for each trade mark
• Evidence of the permission granted to the franchisor, if it is not the rights holder
• Rules governing the channels in which franchisees may use the marks and how they may use them

It is important to distinguish a trade name from a trade mark. The fact that a company name appears on the corporate register does not, by itself, establish trade mark rights in that name. A business registration certificate is not proof of permission to use a trade mark either. This is why checking the identity of your contractual counterparty and checking rights in the brand are separate tasks.

2. Examine the status and scope of the rights, not just registration

Trade mark registration and protection in South Korea are governed by the Trademark Act. Look up the numbers supplied by the franchisor using a patent and intellectual property information search service. Check the mark shown, the rights holder, the specified goods and services, and its current status. For a significant transaction, it is also sensible to verify the rights through official records, such as the trade mark register. Save the search results along with the date of your search.

In particular, an application is not the same as a registration. An application is a request for registration and should not be treated as equivalent to a registered trade mark. Equally, the absence of registration does not automatically make every franchise agreement unlawful or invalid. What matters is establishing which rights are currently secured and what will happen if registration is refused or the mark conflicts with someone else’s rights.

Being given a registration number is not enough. Check whether the registered mark differs from the actual signage and whether the specified goods and services cover the planned business activities. Different uses, such as running a restaurant and selling packaged products, may require separate assessment. If the scope of protection is unclear or you find similar marks, ask a Korean patent attorney to review your actual operating plans.

3. Trace the authority to use the mark if the franchisor is not its owner

The trade mark may belong to the franchisor’s individual representative, an affiliated company or an overseas company rather than the franchisor itself. That structure is not necessarily a problem. The key question is whether the permission granted by the rights holder extends to use by franchisees. Authority for the franchisor to use a mark itself is distinct from authority to allow multiple franchisees to use it.

If the franchisor says it cannot disclose the full licence agreement, you can request an extract showing the relevant terms or written confirmation from the rights holder. This does not mean you are necessarily entitled to receive every document; it is a practical request to verify authority before investing. Where documents are redacted, consider whether the redactions prevent you from checking essential terms.

Check the permitted territory, authorised business activities, whether franchisee use is allowed, the licence period and the conditions under which permission ends. In particular, compare the licence expiry date with the end of your own franchise agreement. An intention to renew is not the same as rights already secured.

If the periods do not align, agree a deadline for the franchisor to provide evidence of an extension. Also discuss whether you can postpone opening or bring the contractual relationship to an end if the licence is not extended. Documents that genuinely cover your agreement’s term matter more than assurances that “we have always used it without any problems”.

4. Agree rules for online use and the costs of trade mark disputes

Do not assume that permission to use shop signage automatically covers every online activity. Check the rules separately for outlet names on delivery platforms, shop photographs on map services, franchisee-run social media accounts and online sales pages. Even if the franchisor creates the accounts, it is sensible to agree whose name they are held in, who has administrative control and how changes to logos must be approved.

To prepare for disputes, ask what happens if a third party demands that you stop using a trade mark. Establish whether the franchisor will lead the response, what documents you must pass on and what actions you should avoid before a response is issued. Article 6 of the Fair Transactions in Franchise Business Act requires franchisees who become aware of a third party infringing the business identifiers to notify the franchisor and cooperate appropriately with measures to stop the infringement. That duty concerns third parties infringing the franchisor’s marks; it is distinct from a third party alleging that your outlet infringes their rights.

A practical approach is to allocate costs in the agreement according to the cause of the problem. Distinguish shortcomings in the franchisor’s rights from situations where a franchisee alters a mark without approval or uses it beyond the permitted scope. Discuss who will bear the costs of replacing signage, discarding packaging, updating online images and losses caused by business interruption, and on what basis. These costs are not always automatically recoverable in full, so specific terms are needed.

5. Complete a one-page checklist before signing

For your final review, summarise each trade mark on a single checklist: its rights holder, legal status, the basis for the franchisor’s use, the scope of permitted franchisee use, the authorised period and any unresolved issues. If the relevant explanations in the franchise disclosure document, the franchise agreement and the evidence of rights differ, establish why and have the necessary documents amended. As a rule, do not fill gaps with verbal assurances alone.

For any item lacking evidence, record who is responsible for obtaining it and the submission deadline. If essential rights remain unclear, avoid rushing into expenditure that is difficult to reverse, such as producing signage or ordering packaging in bulk. A Korean patent attorney or lawyer can assess the scope of legal rights, while a qualified franchise transaction specialist or lawyer can review how responsibilities and costs are allocated under the franchise agreement.

Action summary: Identify the marks you will use and verify that the franchisor’s authority covers both your agreement’s term and your planned business activities. Before investing in the brand, put the procedures for dealing with problems—and responsibility for replacement costs—in writing.