Protecting the Brand Name With
Federal Trademark Registration
Success in franchising requires the ability to protect the brand name. Although a federally registered trademark is not a legal prerequisite to franchising, it is certainly a best practice. Franchisors should ensure they use a name suitable for trademark registration and take the necessary steps to secure a federally registered trademark for all principal marks the franchisee will use when conducting business. At minimum, franchisors should obtain a federally registered trademark for the name and primary logo of the business. the process can take 12-18 months, so it is best to act sooner rather than later.
What is a trademark?
A trademark is a symbol, phrase, design, or combination of these elements that identifies and distinguishes your company’s products or services from your competitors. It is the way consumers differentiate and recognize your brand. The term “trademark” includes service marks, which are used for services while trademarks are used for goods.
Word marks and logo marks (aka image marks) are the two most common types of trademarks. Most every franchisor will have at least one word mark and one image mark. These marks are used systemwide to identify the brand.
A trademark is formed at common law as soon as an individual or entity start using a word or image mark in commerce to deliver a good or service. However, the individual or entities rights in the mark and ability to protect the mark are extremely limited without federal trademark registration. Further, it is not a good practice to license permission to others without federal registration.
Investing in Trademark Protection
Creating a strong brand is a crucial first step when establishing a unique identity in a crowded market. Having a distinctive name and logo can help a business to stand out and become more memorable to consumers, while also helping to build trust and credibility among customers. Protecting these branding elements with federal trademark registration helps businesses protect their investment and market power by safeguarding their brand identity. The United States Patent and Trademark Office currently charges $250 per mark per class when using the PLUS application process or $350 per mark per class when using the Standard application process. Retaining an attorney is not required; however, the process will likely go much smoother with an attorney. Statistically, attorney filed applications are approved at a much higher rate.
Not All Marks are Suitable for Registration
Franchisors should evaluate the strength of their mark and the likelihood of registration before franchising and before applying for registration of a trademark. Not all marks are suitable for registration. If a mark is not suitable for registration or conflicts with a registered mark, then the application is unlikely to be approved absent an agreement or suit.
Suitable Trademarks
The best brands have unique names and logos. For example, the word “Google” invokes only one business in the entire world. This uniqueness makes “Google” an extremely strong mark, and of course suitable for trademark registration. Many business owners want to create a brand that describes what they do, but in creating and building a brand all entrepreneurs must also be cognizant of the potential implications. Strong marks can be protected while weak marks often cannot be protected. As a franchisor, change the brand can have a huge impact and lead to financial losses.
Strong Marks
Choosing a strong trademark is a critical component of any business strategy, and should be carefully considered. The best brand names for registration and protection are suggestive, fanciful, or arbitrary
Suggestive
“Suggestive trademarks” are words that give an idea of what a product or service is like, but don’t directly say it. For example, “Netflix” suggests a company that offers movies or shows over the internet.
Fanciful
“Fanciful trademarks” are born out of pure creativity and imagination. For example, “Nike” or “Wawa” have no meaning aside from identifying their brand.
Arbitrary
“Arbitrary trademarks” are normal words that don’t have anything to do with the products or services being sold by a business. For example, “Apple” has nothing to do with computers, phones, or tablets.
Weak Marks
In today’s competitive world, trademarks are essential to differentiate franchised brands from their competitors. However, certain types of trademarks are weaker than others and therefore, pose challenges to protect against infringement. Moreover, weak trademarks often are not federally registrable. A weak trademark is one that is merely descriptive or is generic.
Descriptive
“Descriptive trademarks” are words that merely describe some aspect of your goods or service. For example, “Delicious Burgers” is merely descriptive.
Generic
“Generic trademarks” are not actually trademarks. They’re merely the common, everyday name for your goods or services. For example, “The Coffee Shop” is generic and is not owned by anyone in particular.
Best Practices in Naming
As a franchisor, the brand must be protected for franchisees and from franchisees. Best practices start with controlling how franchisees name their own business. Legal names should never include the franchisors trademark. For example, if the franchised business is “Bonkers Pet Care”, no franchisee should be permitted to name their legal entity “Bonkers Pet Care of Boston LLC” or anything else containing “Bonkers Pet Care”. Instead, “Bonkers Pet Care” should be reserved for their “doing business” or “dba” name. Using the same example, the franchisee could register their legal entity as “Pet Services LLC d/b/a Bonkers Pet Care of Boston”. Another great solution is to use numbers to identify franchisees instead of a location. This is often better in many systems with smaller territories. For example, “Pet Services LLC d/b/a Bonkers Pet Care #10003”. Using numbers as an identifier can also make tracking and accounting easier from a practical standpoint.
It should always be clear to the public and any trading partners that franchisees are an independently owned and operated franchised business. Instituting a proper naming convention is a great first step.