Owning a franchise can be very lucrative for its owners. A primary selling point to a franchisee is ensuring sales when a franchisee starts a business due to the reputation and goodwill connected to your brand. Your franchise’s trademark and branding may be its most important asset, so registering your trademark is critical if you are starting a franchise or considering turning your business into a franchise.
A Franchise is a type of license that grants a franchisee access to a franchisor’s proprietary business knowledge, processes, and trademarks. In exchange for acquiring a franchise, the franchisee usually pays the franchisor an initial start-up fee and annual licensing fees.
Under the FTC's Amended Franchise Rule (aka FTC Rule) and most of the state registration laws, there are three key elements to a franchise:
(a) The franchisor and franchisee are mutually associated with a common trademark, logo, or trade name;
(b) The franchisor must promise to give the franchisee significant assistance or the franchisor must impose significant controls over the franchisee, and
(c) The franchisee is required to pay a franchise fee.
See 16 C.F.R. § 436.1.
Recognizable franchises include McDonald’s, Starbucks, Subway, Taco Bell, SERVPRO, and Ace Hardware.
Registering your trademark on the U.S. Patent and Trademark Office (USPTO)’s Principal Register is essential. Federal Trademark protection entitles the owner of a mark to numerous benefits that help protect the mark, including a presumption of validity, ownership, and exclusive nationwide use of the mark in connection with the type of goods or services for which it was registered. See 15 U.S.C. § 1057(b).
Owners of a federal registration may also use the Lanham Act to pursue trademark infringement claims in federal court. The Lanham Act provides for statutory remedies that would be otherwise unavailable to trademark owners, including damages for infringement that are separate from what the franchisor may be able to claim against a rogue franchisee for breach of the franchise agreement. See 15 U.S.C. § 1114.
Ensuring federal protection for your trademark makes the franchisee feel safe that others won’t be able to compete with the franchise they have purchased. It also gives the franchisor the right to build a unique and profitable brand.
Our Trademark attorneys, Rolanzo White and Tiera Fletcher, have worked with countless entrepreneurs and businesses to register and defend their trademarks with the USPTO. Feel free to reach out if you are starting a franchise or just want to protect your brand.