Franchise trade marks: checking rights before launch

An established business may already have recognisable signage, loyal customers and several company-owned outlets. But that does not mean its brand rights are ready to be granted to partners. When building a franchise network in Russia, it is important to check not just whether a registration certificate exists, but also who owns the mark, which goods and services it covers, and how rights will be formally granted to each franchisee.

1. Distinguish the trade mark from other brand elements

A company name in Russia’s Unified State Register of Legal Entities (EGRUL), a domain name and a social media page are no substitute for a trade mark. They may belong to the same business owner but be subject to different legal rules. Registering a legal entity does not, in itself, confer an exclusive right to the corresponding name as a trade mark.

In Russia, franchise arrangements are governed, among other provisions, by Chapter 54 of the Russian Civil Code, ‘Commercial Concession’, while trade mark protection falls under Part Four of the Code. Under Article 1027, the package of exclusive rights granted under a commercial concession agreement includes the right to a trade mark or service mark. An application for registration therefore cannot be treated as equivalent to an existing exclusive right.

Start by taking stock of the names and marks that the partner will actually use:

• the name displayed on premises and in advertising;
• the logo on packaging, uniforms and documents;
• the name or mark used for the online shop or app;
• separate names for product ranges.

For each element, record the rights holder, the legal basis for its use and whether it is registered. This table will show where the brand is protected and where the business is still relying solely on established use of a name.

2. Check ownership, status and scope of protection

Check the details in the official trade mark register maintained by Rospatent, Russia’s intellectual property office, rather than relying on a copy of the certificate. Verify the registration number, the image or word mark, the rights holder, the term of the exclusive right and any registered dealings affecting that right. For an international registration, separately verify that protection has been granted in Russia.

Pay particular attention where the founder owns the mark personally but another entity, such as a management company, intends to sign agreements with partners. Do not assume that a company is entitled to deal with a mark owned by one of its shareholders or members. Before offering a franchise, establish a lawful structure for ownership and the granting of rights. Have the proposed arrangement reviewed by a specialist lawyer or patent attorney.

Next, compare the goods and services listed in the registration with the franchisee’s planned activities. What matters is not just the class number under the International Classification of Goods and Services, also known as the Nice Classification, but the specific items within it. Protection for a mark in relation to certain goods does not automatically extend to every service offered under the same name.

For example, a business may both sell own-brand products and provide food services. When preparing to franchise, assess both activities rather than assuming that a single registration covers every use of the brand.

3. Address gaps before making promises to partners

If the mark is not yet registered, first search for similar marks and assess the risk of refusal. Checking only for identical names is not enough: confusing similarity in relation to similar goods and services may also matter.

When updating a logo, compare the version actually used with the registered version. Not every change requires a new application, but a substantial redesign needs a separate legal assessment. Do not leave franchisees to decide for themselves whether a new version of the signage is acceptable.

If the registration does not cover the required goods or services, a new application will usually be needed. The scope of an existing registration cannot be extended simply by signing a supplementary agreement with a partner.

Draw up a plan to address any gaps, assigning responsibilities and target dates. Include searches, filing applications, responding to examination queries, formalising rights within the corporate group and monitoring registration renewals. Do not promise a partner a guaranteed date for obtaining protection: neither the outcome nor the duration of the procedure is entirely within the applicant’s control.

4. Properly formalise the grant of rights to franchisees

Commercial organisations and registered individual entrepreneurs may be parties to a commercial concession agreement. The agreement must be in writing; failure to meet this requirement renders it void. Article 1028 of the Russian Civil Code requires state registration specifically of the grant of the right to use the package of exclusive rights under the agreement, rather than merely registration of the signed document.

If this requirement is not met, the grant of the right to use those rights is deemed not to have taken place. This should not be confused with a claim that any agreement not submitted for registration is automatically void.

Identify the mark precisely in the agreement and agree the limits of its use: the relevant goods and services, territory, term and permitted ways of displaying the mark. Separately allocate responsibility for preparing documents, submitting the application, paying official fees and responding to Rospatent’s queries. Under the default rule in Article 1031 of the Russian Civil Code, the rights holder is responsible for arranging registration unless the agreement provides otherwise.

Align the launch timetable with the registration procedure. Signing the agreement, producing signage and paying the franchise fee do not, in themselves, replace state registration of the grant of rights.

5. Put ongoing controls in place after opening

Appoint a member of staff to maintain a register of marks and rights granted to partners. It should clearly record protection periods, agreements, territories, evidence of registration and any follow-up action required.

Establish procedures for approving artwork and checking quality. Article 1032 of the Russian Civil Code requires the user of the rights to ensure that the quality of its goods, work or services matches that of the rights holder’s equivalent goods, work or services. For a franchise network, this is not just a legal requirement but also a way to protect its shared reputation.

Agree in advance how use of the brand will cease when the relationship ends, including removal of signage, updates to digital channels, handling of branded materials and any necessary registration formalities.

Practical takeaway: before offering a franchise, prepare a trade mark file containing up-to-date registry details, a review of the goods and services covered, evidence of the rights holder’s authority to grant rights, and a clear procedure for registering the grant of rights to each partner.