What are the key trademark issues to consider for your franchise?

Business Opportunities in Chennai

Hello people, how have you all been? Let me share the good news that something big is coming your way this week in terms of franchising opportunities in Dubai and the Middle East regions Strategizer has established a major partnership in the MENA region to help build strong franchise network. That’s it as of now. Further developments will be updated later. Let me discuss in this blog some of the key trademark issues that come into play when considering a franchise.

Franchising essentially involves a franchisor licensing its intellectual property rights (IPR)—business concepts, copyright, trade secrets, and copyright—to a prospective franchisee. This means that franchise can market, sell and distribute goods and services only under the franchisor’s brand, using the franchisor’s business systems.  It is important for franchisors to pad themselves up with adequate protection against exploitation of intellectual property, and to take effective steps towards enforcement of trademarks. Here are some of the things worth considering both parties involved during and post-franchise relationship.

The inclusion of a license for trademark use in the agreement:
Licenses for using franchisor’s trademark (in return of royalties or fees) are usually part of the franchise agreement. Also specified is how the trademarks should be used in an authorized manner. Additionally, all rights and obligations pertaining to the License Agreement must be disclosed to the prospective franchisee that helps it to decide whether or not to operate under the specified requirements.

Conditions in place for IP use:
The ways in which IPR feature can concern both parties involved in the franchise agreement. Specific conditions may put some cap on the use of the IP only within the limits of the franchise business, and whether or not trademarks are sub-licensable—whatever, the agreement should set up all conditions relating to the use of Intellectual Property.

Protections of the trademarks in place:
Franchisors need to protect their IP from use by competition through proper registration.  If the registered owner has allowed another person to use the trademark, it is considered as use only by the registered owner, or franchisor in this case. Therefore, the franchise agreement should clearly specify the license to the franchise consultants for the protection of trademarks.  The franchisor can also add this license to the trademark registration for added proof. Also, the franchisor should guarantee complete protection of all IPRs and take action against any form of trademark infringement. Franchisees, being small businesses, are not equipped to handle such claims.

Maintaining the reputation of the business:
While the advantages of utilizing trademarks, if you’re a franchise, are myriad, any conditions specific to this use may require the franchisee comply with the rules set to protect the value of the IP, and, by this, to produce the expected business results. How the franchises should maintain this value and limit the use of the trademark in the matters of business process should be clearly outlined to maintain brand reputation, and avoid reputational damage. Sometimes, there is the likelihood that too many restrictions can limit a franchisee’s business creativity.

Protection of trademarks upon the termination of the franchise agreement:
The termination of any franchise agreement may also signal the end of the use of the franchisor’s trademark and the license concerning it, unless otherwise particularized. This is because the license granted applies only on the IP of the franchise, and not any transfer of ownership. As IPRs of the franchisor are protected through registration, the franchise can no longer continue to use the former franchisor’s trademark upon the conclusion of the franchise agreement, and the branding of any new business shouldn’t copycat it further. Its consumers shouldn’t be lured into believing that the franchise is still being operated under the franchise, otherwise, it can be made to indemnify for losses. This is what every other Franchise Consultants in Hyderabad, Bangalore and all over India are followed.
Don’t hesitate to give me a call for filing and handling trademark registration.

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