Buying a franchise: checking trade mark rights in Portugal

When you buy a franchise, part of your investment gives you access to a commercial identity that customers recognise. But a professional presentation, a website domain or an operating shop does not prove that the business selling the franchise can license that trade mark. Checking ownership and permission to use the mark is an essential part of franchise due diligence before making any commitments.

1. Confirm what is actually protected

Start by asking the franchisor for a list of the trade marks you will use, including their registration or application numbers, owners and territories covered. Include the main name, the logo and any own-brand trade marks relevant to your outlet.

Then check this information against the official registers. For national trade marks, consult Portugal’s National Institute of Industrial Property, INPI. For European Union trade marks, consult the EUIPO: these can provide protection in Portugal. If there is an international registration, confirm the protection applicable to Portugal or the European Union and its current status; designating a territory does not, on its own, demonstrate that protection is in force.

Check four elements:

• Owner: does the person or company named match the documentation provided?
• Status: is the mark registered, is the application still pending, or have the rights already ceased to exist?
• Goods and services: does the protection cover what your outlet will sell or provide?
• Validity: are any renewals due soon, or are there any developments that need clarification?

A trade mark registered for particular goods is not automatically protected for every service. Likewise, registering a company name or domain name is not the same as obtaining a trade mark registration.

Keep dated copies of your searches. If you are unsure about the scope of protection, ask a lawyer or a registered industrial property agent to review it.

2. Trace the chain of authorisation through to your contract

The franchisor may not own the trade mark. The rights may belong to another company in the group or to a foreign entity that has authorised an operator to develop the network in Portugal. This is not necessarily a problem, but the authorisation must be verified.

Ask for documents showing that the entity you will contract with can grant you the right to use the trade mark. Where several parties are involved, check the chain linking the owner, the licensee or master franchisee, and you as the prospective franchisee.

Your review should establish:

• Whether the main licence allows sublicences or franchises to be granted.
• Whether that authorisation covers Portugal and the intended uses.
• Whether the duration of the authorisation is compatible with the proposed contract.
• What losing the main licence would mean for your outlet.

A commercial statement that an ‘international partnership’ exists is no substitute for this evidence. Where information is confidential, suggest that a lawyer bound by confidentiality review the documents, or ask for extracts sufficient to verify the rights granted.

Also check the corporate documentation to confirm who is authorised to represent the contracting entity. The network’s familiar trading name may differ from the legal name of the company that will receive payments and take on the contractual obligations.

3. Understand the rules that apply in Portugal

Portugal has no specific franchising law, nor does it require a pre-contractual disclosure document specifically for this business model. This does not remove the duties to provide information and act fairly during negotiations.

Article 405 of the Portuguese Civil Code provides for freedom of contract, while Article 227 addresses good faith in pre-contractual dealings. Omissions or inaccurate information about trade mark rights may have legal consequences, depending on the circumstances.

Where a contract uses standard terms and conditions, Decree-Law No. 446/85 applies, including duties to communicate and explain those terms. Trade mark protection and licensing are governed by the Industrial Property Code, approved by Decree-Law No. 110/2018, as amended. Licences of industrial property rights must be in writing; seek advice on recording them in the relevant register and their effects in relation to third parties.

The European Code of Ethics for Franchising is a self-regulatory reference, not a Portuguese law that automatically applies to every network. Membership of a franchise association is no substitute for checking trade mark rights.

4. Turn your checks into contractual protection

The contract should identify the authorised trade marks, either directly or in a schedule, and define their permitted uses: shopfront signage, packaging, local advertising, the outlet’s webpage and social media, for example.

Ask for clear clauses setting out who maintains and renews the rights, who notifies whom of third-party claims, and who handles the defence and pays the costs of a dispute. Also clarify what happens if a ruling prevents use of the trade mark.

A compulsory rebrand may require new signage, materials and campaigns. Agree in advance who will pay these costs and what contractual remedies are available if the outlet can no longer operate under the agreed brand. Do not assume that compensation will be automatic.

Practical takeaway: before signing, obtain evidence of trade mark protection, the chain of authorisation and the clauses dealing with the loss of those rights. If any of these elements is missing, resolve the issue before proceeding.