Trademark

✅ Short Definition

Trademark refers to a legally registered word, phrase, symbol, or design that identifies and distinguishes a franchisor’s brand from others in the marketplace. It is licensed to franchisees for use in branding, signage, marketing, and products. Trademarks are protected under intellectual property law and play a central role in franchise agreements.

🧾 Long Definition

Trademark in franchising is the intellectual property—typically a name, logo, or slogan—that represents the franchisor’s brand and is licensed to franchisees for use in their local operations. It is a symbol of the franchisor’s reputation, quality standards, and brand equity. Franchisees operate under this trademark to deliver a consistent customer experience. Trademarks are registered with the United States Patent and Trademark Office (USPTO) and may also be registered internationally. The franchise agreement grants the franchisee a limited right to use the franchisor’s trademarks for the duration of the agreement, subject to strict compliance. Unauthorized use, improper modification, or continued use after termination can lead to legal action, including trademark infringement claims.

Additional Definition: Any word, name, symbol, or device or any combination thereof adopted and used by a franchisor to identify its goods and/or services and distinguish them from those manufactured or sold by others. A careful franchisor grants only clearly defined or restricted use of its 'trademark'. Such restrictions are spelled out in the franchise agreement and are therefore commonly referred to as “contractually limited use” of the 'trademark'.

Learn more about franchising in The Educated Franchise - 3rd Edition

🕰️ History and Usage

The importance of the trademark in franchising began with early brand-centric businesses like Coca-Cola and McDonald's, where brand recognition was essential to scale and consistency. As franchising matured, trademarks became the cornerstone of the franchise system’s value. The Lanham Act, passed in 1946, codified federal trademark protections in the U.S. and enabled franchisors to enforce rights across all states. Today, trademarks are central to the Franchise Disclosure Document (FDD), with detailed information provided in Item 13. Courts have consistently ruled in favor of franchisors when enforcing trademark rights against former franchisees or infringing third parties.

🧠 What Trademarks Typically Cover in Franchising

• Brand Name: The primary identity of the franchise, e.g., “Jersey Mike’s”
• Logo Design: Stylized or graphic representations of the brand
• Taglines & Slogans: Memorable phrases like “Have it Your Way”
• Product Names: Proprietary menu items or services with brand value
• Visual Identity Elements: Fonts, color schemes, or layout styles protected as part of a composite mark

❓ Five Common Questions About Trademarks

1. Who owns the trademark in a franchise system?
   The franchisor owns the trademark and licenses its use to franchisees.
2. Can a franchisee register a new trademark?
   No, franchisees may not create or register branding that conflicts with the franchisor’s intellectual property.
3. What happens if a franchisee misuses the trademark?
   This may lead to termination of the agreement and legal claims for trademark infringement.
4. Is the trademark disclosed in the FDD?
   Yes, detailed information is disclosed in Item 13 of the Franchise Disclosure Document.
5. Does trademark protection end when the franchise agreement ends?
   Yes, franchisees must cease all use of the trademark immediately upon termination or expiration of the agreement.

📝 Examples of Common Usage for Trademark

• 'The franchisee was granted a limited license to use the franchisor’s registered trademark for marketing purposes.'
• 'Item 13 of the FDD lists all registered and pending trademarks owned by the franchisor.'
• 'Continued use of the brand’s trademark after termination led to a cease-and-desist letter.'

📌 Summary

Trademark protection is fundamental to the franchising model, giving franchisees the right to operate under a trusted and recognizable brand. Controlled by the franchisor and protected under federal law, trademarks ensure consistency, brand integrity, and legal recourse in the case of misuse. Understanding how to properly use and respect a franchisor’s trademark is essential for any successful franchise relationship.