By Annabel Dunster, Associate Solicitor for Hamilton Pratt
Branding is one of the most important elements of a franchise model. Brand awareness is more relevant than ever, and the ability to use a known and established brand is arguably the biggest draw to prospective franchisees. In this context, it is essential to ensure that branding is used appropriately and is not unlawfully exploited or put at risk.
Some of the most important steps to consider when it comes to protecting your branding are set out below.
· Register your trade mark!
When setting up a franchise, it is imperative that any distinctive elements of the branding are registered. This will usually involve the brand name and the logo.
Registration is important because without it, the franchisor will have no way to prevent third parties from misusing its branding. There would also be a risk that someone else might register a similar trade mark, and then use that to commence infringement proceedings against the franchisor and its franchisees.
Trade marks must be renewed every ten years. The renewal date should be diarised and a timely renewal application filed.
· Provide franchisees with suitable licences
You should ensure that your franchise agreement adequately protects you from franchisees ‘adapting’ your branding. Franchisees should be given a clear framework as to what they are and are not permitted to do with the franchisor’s brand. The agreement should cover matters such as:
o What the franchisee is permitted to use: set out exactly what elements of the trade marks and/or other branding the franchisee has a right to use; o The products and/or services in relation to which the franchisee is permitted to use the branding; o Strict limitations on alterations to the branding: so that the franchisee cannot make changes to, for example, colour schemes or sizing; o Limitations on where the franchisee is permitted to use the branding, for example if it may only be used on authorised vans, from the business’ premises, etc.; o If the franchisor undergoes a rebranding exercise, a requirement for the franchisee to update the branding used in its franchise business.
· Enforce those requirements within the network
If a franchisee is making unauthorised use of the branding this harms the network as a whole. Franchisors should monitor their franchisees’ activities, and if any breaches are discovered concerning the use of branding, the franchisor should take swift action. Depending on the seriousness of the franchisee’s actions, sending a letter detailing their breach of contract is often sufficient to bring them ‘back in line’. In a more serious case, it may be necessary to terminate the franchise agreement, or even commence court action, in order to protect the brand, but that should always be a last resort.
Franchisors should also ensure that post-termination provisions preventing franchisees from continuing to use the franchisor’s brand are rigorously monitored and enforced.
· Prevent infringement by third parties
There are two ways in which the activities of third parties should be monitored. First, franchisors should take action against anyone who attempts to use branding which is similar to or the same as the franchisor’s brand. This is usually by way of a ‘cease and desist’ letter, with legal action commenced if necessary. Secondly, franchisors should monitor and review any trade mark applications which contain elements similar to their own. If appropriate, you could then object to the registration of their trade mark.
Franchisors should encourage communication with franchisees concerning the actions of third parties. If franchisees are confident that the franchisor will work with them to protect the brand, they will be more likely to approach the franchisor if they discover infringement by a third party. The franchisor may even wish to delegate enforcement to its franchisees.
Effective use of branding is a vital part of maintaining the franchise’s brand. Following the steps above will assist in maximising your franchise’s brand awareness and keeping the network happy.