Choosing the Right Name
Continuing with an existing brand name or selecting a new brand name is one of the first and most critical steps in establishing a franchise. The name must be memorable, legally available, and capable of registration as a trade mark. Before committing to a brand, franchisors should undertake comprehensive availability searches to ensure the proposed name does not conflict with any existing trade marks or business names.
Descriptive or generic names are often difficult to protect and can weaken a franchisor’s competitive edge. Ideally, a brand name should be distinctive and adaptable to future growth, allowing for the possibility of global expansion across products, services, and territories. Investing in obtaining professional trade mark advice at the outset can prevent costly disputes or having to rebrand later on.
Protecting the Brand
Once a brand name has been selected, formal protection should be secured in the form of a registered trade mark in respect of the goods and services for which the brand is used. A registered trade mark provides the franchisor with exclusive rights to use the mark in relation to the applied for goods or services throughout Australia and can be extended internationally if the franchise model expands overseas.
Beyond trade marks, franchisors should also consider protecting any associated intellectual property (IP) such as logos, slogans, website content, training materials, operational manuals or proprietary-owned software or systems. These assets collectively represent the brand identity of the franchise network and should be treated as valuable IP to be safeguarded under appropriate legal frameworks and confidentiality measures.y to future realised earnings only, with Treasury to consult on how best to calculate and attribute those earnings to individual fund members.
Ownership of Intellectual Property
A fundamental principle of franchising is that the franchisor or an associate of the franchisor retains ownership of all core IP. This structure ensures brand consistency and control over how the brand is used by the franchisor and its franchisees across the network.
In some cases, it may be commercially advantageous for an associate entity of the franchisor (for example, a holding company or IP management company) to own the trade marks and related IP. Where this arrangement applies, the IP is held by the associate and licensed to the franchisor under the terms of an IP licence agreement. This agreement typically grants the franchisor the right to use the IP in operating the franchise system and to grant sub-licences to franchisees, allowing them to use the IP in accordance with the system’s standards and guidelines.
Regardless of ownership structure, it is essential that the relevant agreements clearly identify who owns the IP, who has the right to use it, how it can be used and the extent to which it may be licensed or sub-licensed. Franchisors should also regularly review their trade mark registrations and IP ownership records to ensure they reflect current business arrangements, brand updates, or new offerings. Failing to maintain clear documentation can expose the network to unnecessary risks, including disputes between entities or challenges from third parties.
Use of IP by Franchisee
Franchisees play a vital role in growing and upholding the brand’s reputation. Therefore, their use of the franchisor’s IP must be carefully managed. Franchise agreements should provide clear terms regarding the use of trade marks, marketing materials, and other IP assets. Franchisors should also monitor compliance by franchisees through ongoing brand audits and training programs to maintain uniform standards.
Proper IP management not only protects the franchisor but also benefits franchisees, providing them with a trusted, recognised brand to operate under.
Key Takeaways
Start strong: Choose a distinctive and legally available name that can be protected through trade mark registration.
Protect early: Register your brand and related IP assets before launching or franchising your business.
Retain ownership: Ensure all trade marks and IP rights are owned by the franchisor or an associate of the franchisor, not individual franchisees. Also, it is important to discourage franchisees from using any trade marks or names as part of their corporate name.
Control use: Clearly define how franchisees may use the brand and enforce compliance to maintain consistency.
Review regularly: Keep registrations and agreements up to date to reflect business growth and brand evolution.
To obtain tailored and practical advice on how these principles apply to your franchise system, and to ensure your trade mark and intellectual property arrangements are appropriately protected, contact the Intellectual Property and Franchising team at Rouse Lawyers.