Franchising in Portugal: checking trade mark protection

A brand that customers recognise is not necessarily ready to be shared with franchisees. Before turning an existing business into a franchise network, you need to establish who owns the rights, what is protected and on what terms other businesses can use that identity. These checks help avoid building your expansion around a name whose use could be challenged.

1. Identify the trade mark and its actual owner

Start by gathering the elements used in the business: its name, logo, product range names and signs used on shopfronts, packaging and digital channels. Then compare how these are used with the existing industrial property registrations.

Incorporating a company or registering a domain name is not the same as registering a trade mark. These serve different purposes and should not be treated as interchangeable evidence of protection.

For each trade mark, prepare a record covering:

• Application or registration number and the responsible authority;
• Exact details of the owner;
• Protected sign, including its graphic representation where applicable;
• Goods and services covered;
• Territory in which it is protected;
• Application or registration status, validity and next renewal date;
• Licences, transfers of ownership or other relevant transactions.

One point deserves particular attention: the trade mark may belong to the founder, while the company will enter into the franchise agreements. This does not necessarily prevent the project from proceeding, but the company needs a proper legal basis for granting franchisees rights to use the mark. It is not enough for the owner and the company’s manager to be the same person.

2. Check that protection matches the actual business

A registration does not automatically protect every activity associated with a name. Protection depends, among other things, on the goods and services covered and the relevant territory.

Compare the list in the registration with what each future outlet will actually sell or provide. For example, a business that started by selling products and later began offering training should check whether its existing protection covers the activities it intends to replicate. The review should focus on the specific list of goods and services, not just the class numbers.

Check the geographical scope too. A Portuguese national trade mark has a different territorial reach from a European Union trade mark. Protection in another country does not, in itself, mean that you have protection in Portugal. National applications are filed with Portugal’s National Institute of Industrial Property (INPI), while European Union trade marks are administered by the EUIPO.

Also search for similar earlier signs, particularly if the business has changed its name, redesigned its logo or expanded its offering. A search cannot guarantee that there are no conflicts, but it can help identify risks that warrant specialist advice.

Do not present a pending application as a granted registration. If there is an opposition, challenge or significant uncertainty, resolve it or clearly establish how it will be addressed before making commitments to expand.

3. Document franchisees’ right to use the trade mark

Portugal has no specific franchising law or compulsory register of franchisors. This does not remove the requirements that apply to trade marks and their use by third parties.

Franchise agreements are governed by the general principles of the Portuguese Civil Code, including freedom of contract and good faith. Where standard contract terms are used, Decree-Law No. 446/85 applies. Portuguese and EU competition rules must also be respected.

For trade marks, the key legislation is the Industrial Property Code, approved by Decree-Law No. 110/2018. Licences to use industrial property rights must be in writing; recording them on the register is relevant to their effect against third parties. The absence of specific franchising formalities does not remove these separate requirements.

The licence can form part of the franchise agreement, provided it adequately identifies the rights and conditions of use. It should specify the authorised trade marks, the goods and services covered, the territory, the duration and whether the permission is exclusive or non-exclusive.

If the franchisor is not the owner, explicitly confirm that it has the right to grant sublicences. Also check that the duration and terms of its own rights allow it to fulfil its commitments to franchisees.

4. Put simple checks in place before expanding

Turn the review into a process with a designated person responsible and readily accessible documents. Keep registration certificates, proof of renewal, licence agreements and relevant correspondence in a central folder with controlled access.

Maintain a renewal calendar and a procedure for reporting unauthorised use or notices received from third parties. Also retain dated evidence of genuine use of the trade mark, such as catalogues, packaging and advertising: this may be relevant when defending existing rights.

Before approving a new outlet, confirm that the identity presented to the prospective franchisee matches the protected trade mark and its authorised use. If a transfer, licence or update is outstanding, assign responsibility and resolve the issue before authorising investment in shopfronts and materials.

Practical takeaway: before recruiting franchisees, put together a file demonstrating three things: who controls the trade mark, what is protected and the legal basis on which each outlet will be able to use it.