Check Your Trade Marks Before Franchising a Business in Malaysia

A shop name that customers recognise is not necessarily ready to be licensed to franchisees. Before expanding an existing business into a franchise network, make sure its trade marks are properly protected and that the entity offering the franchise has the right to authorise their use. These checks help prevent ownership disputes, application delays and the cost of replacing signage after outlets have opened.

1. Distinguish between a business name and a trade mark

Registering a company or business name with the Companies Commission of Malaysia is not the same as registering a trade mark. Similarly, owning a domain name or social media account is not proof that a name has been registered as a trade mark.

In Malaysia, the main legislation currently governing trade mark registration and protection is the Trademarks Act 2019, administered by the Intellectual Property Corporation of Malaysia, or MyIPO. Do not rely on outdated references to the Trade Marks Act 1976 as your main guide for new applications.

Franchise networks, meanwhile, are subject to the Franchise Act 1998, including amendments that came into force in 2022. Franchise registration and trade mark registration are separate processes. Neither replaces the other, and a trade mark certificate alone does not allow an owner to start offering franchises without meeting franchise registration obligations.

Start by listing the brand names, logos and key identifying elements that every franchisee will use. Distinguish essential elements from seasonal slogans or campaign graphics that change frequently.

2. Establish who owns the trade mark and who can authorise its use

Check the owner's name in the trade mark records. In a business that has grown in stages, the trade mark may still be registered in the name of the founder, a former company or another entity within the group.

This does not necessarily prevent franchising, but usage rights cannot rest solely on a verbal agreement. The entity offering the franchise must have a clear legal basis for allowing franchisees to use the brand.

Prepare an ownership file containing:

• Trade mark registration certificates and status records.
• Assignment documents if ownership has been transferred.
• Licence agreements if the registered owner is not the franchisor.
• Evidence of permission to grant usage rights to franchisees, where relevant.
• Documents recording changes to the owner's name or corporate restructuring.

Ask a lawyer or trade mark agent to review this chain of rights. If the franchisor is itself only a licensee, check whether its licence allows it to grant rights to franchisees and whether the licence's duration and terms support the franchise plans.

Do not assume that family ties or common ownership between companies are sufficient evidence of permission.

3. Match protection to the actual business

Trade marks are registered for specific goods or services. Your checks should therefore go beyond asking whether the brand name is registered. Examine the scope of the goods and services covered as well.

For example, a food business might operate restaurants and sell packaged products under the same brand. Protection for restaurant services does not necessarily cover every product it sells. Obtain an assessment of the appropriate classes and descriptions based on the business's actual activities and any expansion genuinely planned.

Also compare the registered mark with the version used on shop signs, packaging and promotional materials. If the logo has changed significantly, do not assume that the existing registration protects the new version in the same way.

Carry out a search before investing heavily in a new brand identity. A search helps identify risks from similar earlier marks, but does not guarantee that an application will be approved or that no one will oppose it.

For brands registered overseas, check their protection in Malaysia specifically. A foreign registration does not automatically provide protection there.

4. Prepare evidence for the franchise application

A franchise registration application requires supporting documentation, including copies of the relevant Malaysian trade mark registration certificates. Do not confuse an application filing receipt with an issued registration certificate.

Create a simple table for each trade mark, recording its owner, registration number, scope of protection, status, renewal date and document location. Flag any matters that still require action before preparing the franchise application.

If a trade mark application is still under examination, facing opposition or awaiting amendments, factor that uncertainty into your preparation timetable. Avoid setting a launch date on the assumption that every application will succeed.

Where ownership arrangements are complex, confirm the current requirements with the Registrar of Franchises or an appropriate adviser. The aim is to resolve questions about brand rights before prospective franchisees make a commitment.

5. Set controls on use from the outset

Once the rights are clear, establish how franchisees may use the trade marks. The franchise agreement should identify the rights granted and the limits on their use, while brand guidelines should explain day-to-day implementation.

Specify approved logo versions, the approval process for promotional materials and who will handle complaints about unauthorised use. Also clarify the rules for social media account names, local domains and use of the brand by franchisees' suppliers.

Appoint a coordinator to monitor registration renewals and retain evidence of brand use. This reduces the risk of responsibilities being overlooked when staff change.

Practical step: before offering franchises, complete a trade mark file that establishes ownership, the scope of protection and the franchisor's right to authorise use. Resolve significant gaps first, rather than after franchisees have paid to operate under the brand.