Franchising in Portugal: protect your trade mark before expanding

A brand that customers recognise is not necessarily ready to be shared. When turning an existing business into a franchise network, the business owner must ensure they can authorise third parties to use its name and distinctive signs. This check helps prevent expansion from relying on an asset that lacks adequate protection or over which the company has insufficient control.

1. Confirm ownership and what is protected

Start by gathering the elements used to identify the business: its name, logo, own-brand product names, domain names and social media handles. Then distinguish those protected as trade marks from those simply used commercially.

Registering a company or a domain name is no substitute for registering a trade mark. In Portugal, national trade mark applications are submitted to the National Institute of Industrial Property (INPI), not the commercial registry.

Prepare a checklist covering:

• The protected sign and its application or registration number;
• The identity of the applicant or owner;
• The goods and services covered;
• The territory in which protection applies;
• The status of the application or registration and relevant renewal dates;
• Any existing licences, assignments or other encumbrances.

Founders often apply for a trade mark in their own name, even though the company operates the business. This does not necessarily prevent franchising, but the company needs a clear legal basis for granting rights to use it. Nor should a licence obtained from a third party be assumed sufficient: check whether it allows sublicensing to franchisees.

Check the rights to the logo as well. Paying a designer does not, in itself, settle all the conditions governing reproduction, modification and use by third parties.

2. Check that protection keeps pace with expansion

A trade mark should protect the activities the future network will actually carry out. Review the goods and services listed in the registration under the Nice Classification. The class number alone is not enough: you need to read the specific list covered.

For example, a service business that starts selling own-brand products should check whether its existing protection covers this new use. Do not assume the initial registration automatically covers everything the business may sell in future.

Consider the territory too. A Portuguese national trade mark provides protection in Portugal. A European Union trade mark, registered through the European Union Intellectual Property Office (EUIPO), can provide protection across EU Member States, but requires an assessment of relevant earlier rights in that territory.

Before investing in new shopfront signage or franchisee recruitment campaigns, carry out searches for earlier rights. Look for similar signs, not just identical names. Visual, phonetic or conceptual similarity may be relevant to a conflict.

Filing an application is not the same as obtaining a registration. If the application is pending or faces opposition, do not present protection as secured. Seek a specialist assessment and decide whether to postpone commitments that would be difficult to reverse.

3. Translate trade mark rights into contractual rules

Portugal has no specific franchising law or dedicated compulsory register for franchisors. Among other legal provisions, the general rules of the Civil Code apply, including freedom of contract and good faith in negotiating and performing contracts. Trade mark protection and licensing are governed by the Industrial Property Code, approved by Decree-Law No. 110/2018, as amended.

The European Code of Ethics for Franchising is a self-regulatory instrument for those bound by it; it does not replace Portuguese legislation.

In the agreement, identify the authorised trade marks precisely, rather than referring simply to ‘the business brand’. Define:

• Permitted uses on premises, in advertising, on packaging and through digital channels;
• The territory and duration of the authorisation;
• The approval process for materials and changes;
• Limits on use by external service providers;
• A prohibition on registering signs or domain names in the franchisee’s own name without authorisation;
• Procedures for misuse or disputes with third parties.

Licences of industrial property rights must be in writing. Also check the requirements for recording the licence with the relevant authority, particularly so that it can be relied on against third parties. The licence included in the franchise agreement should be reviewed by a professional experienced in industrial property.

4. Organise oversight during and after the relationship

Appoint someone to manage renewal dates and monitor the trade mark. Keep registration certificates, authorisations and approved versions of visual assets in a central repository accessible to those managing the network.

Also establish how franchisees should report imitations or unauthorised use. Avoid improvised public responses or legal threats: gather evidence and assess the rights involved before taking action.

Plan for the end of the relationship from the outset. The agreement should set out how use of the trade mark must cease, including on shopfronts, in advertisements, on digital profiles and on any remaining materials. For local channels, clarify account ownership and access arrangements in advance, while complying with platform rules and data protection requirements.

Practical takeaway: before recruiting your first franchisee, complete the trade mark checklist, resolve any ownership questions and verify the authorisation to use it. Only then should you commit the network to an identity that everyone will need to protect.