Franchise Trade Marks: What to Check Before You Buy

A familiar shopfront sign and a trade mark certificate do not necessarily mean that a franchise buyer can legally use the brand for their business. You need to check exactly which sign is protected, for which goods and services, and in which territory. Before joining a franchise network, compare the proposed outlet format with the actual scope of the rights on offer. Here is how to carry out those checks before signing an agreement.

1. Establish which trade mark you are being offered

Ask the seller for the registration numbers of all trade marks your outlet will need. If the brand uses a name, a separate emblem and a combined logo, clarify which of these signs are registered. A certificate for one version should not automatically be treated as proof that all the others are protected.

Compare three sets of materials:

• the images and names in the trade mark register;
• the signs specified in the draft agreement and its schedules;
• the signage, packaging, menus and advertising designs you are expected to use.

For example, a chain may show you an updated logo while offering rights to an older combined mark. This does not necessarily indicate an infringement, but it needs an explanation: which mark will be used, what changes are permitted and on what basis? If there are substantial differences, it is advisable to obtain an opinion from an intellectual property specialist.

Check current records held by Rospatent, Russia’s intellectual property office, rather than relying solely on a scanned certificate. Establish who owns the rights, the registration’s status and when the exclusive right expires. If the seller is not the rights holder, request documents confirming their authority to grant rights to the buyer.

Keep a dated record of your checks. Months may pass between the franchise presentation and signing the agreement, so check the information again immediately before proceeding.

2. Match the trade mark’s protection to your outlet’s offering

A trade mark does not confer a blanket monopoly over a name. The scope of protection depends, among other things, on the list of goods and services for which it is registered. These are grouped under the International Classification of Goods and Services, known as the Nice Classification.

Do not stop at the class numbers. A single class may contain different goods or services, so you need to read the specific list in the registration. Assessing a possible infringement also involves considering whether the goods and services are similar: the absence of identical wording does not settle the question.

Create a table with three columns: ‘What the outlet will do’, ‘How the brand will be used’ and ‘Evidence of the right to use it’. Use separate rows for the main service, sales of goods, products you make yourself and any additional activities.

For a coffee shop, for example, serving customers and selling packaged coffee under the chain’s brand are different forms of commercial use of the sign. Registration for food and drink services does not, on its own, establish that every product on the shelf is covered. Likewise, the right to sell genuine goods is not the same as the right to apply the mark to products you make yourself.

Ask the franchisor to explain in writing every mismatch between your offering and the registration’s list of goods and services. If a new product range is only at the planning stage, do not treat its projected revenue as guaranteed when assessing the purchase: first confirm that the brand can be used for it.

3. Check the territory, duration and any disputes over registrations

To operate in Russia, the trade mark must have legal protection specifically in Russia. A foreign certificate alone does not establish this. Protection may be based on a Russian registration or an international registration that has effect in Russia.

If the seller shows you only an application, distinguish it from a registered right. Filing an application does not guarantee registration and is no substitute for an existing exclusive right to a trade mark. A promise that ‘the certificate will arrive soon’ calls for a separate legal assessment of the proposed transaction, not simply replacing the registration number with an application number.

Check when protection expires. Under Article 1491 of the Russian Civil Code, the exclusive right to a trade mark lasts for ten years from the application filing date and may be renewed repeatedly for further ten-year periods. An old registration is therefore not necessarily a problem, and an approaching expiry date does not mean the brand will inevitably lose protection. What matters is establishing who will arrange renewal and when.

Also request information about challenges to protection and claims seeking early termination of the right. Check available Rospatent decisions and court cases relating to the specific mark. The existence of a dispute does not determine its outcome, but its subject matter could be critical to your particular range of goods or services.

4. Incorporate the findings into the agreement

In Russia, commercial concession agreements — the legal framework used for franchising — are governed by Chapter 54 of the Russian Civil Code. Under Article 1027, their subject matter includes a bundle of exclusive rights, including the right to a trade mark or service mark. Article 1028 requires the agreement to be in writing and the grant of the right to use that bundle to be registered with Rospatent. Without registration, the grant of rights is deemed not to have taken effect.

However, registering the grant of rights does not broaden the protection of the trade mark itself. If the relevant rights do not cover a business activity you need, the registration procedure does not remove that risk.

Ask for the agreement to include:

• registration numbers and the exact signs covered;
• permitted goods, services and forms of use;
• an obligation on the rights holder to maintain protection;
• a procedure for notifying you of challenges to, and termination of, the rights;
• allocation of costs if problems with the rights require signage or packaging to be changed.

Russian law does not prescribe a specific mandatory pre-contractual disclosure document for franchises. You should therefore request the evidence you need yourself, bearing in mind the parties’ general duty to negotiate in good faith under Article 434.1 of the Russian Civil Code.

Practical takeaway: before buying, establish a clear chain linking ‘the specific mark — confirmed protection in Russia — your offering — permitted use’. If any link remains unverified, resolve the uncertainty before taking on financial commitments.