Identify the perfect franchise for you! Take our short quiz Take our free franchise quiz!
Identify the perfect franchise for you! Take our short quiz Take our free franchise quiz!

Protect Your Brand: Trademark Monitoring for Franchisors

franchise trademarks

Almost all franchisors own at least one federally registered trademark (and if they don’t, they should). As a general principle, brand owners are required to monitor and enforce their trademark rights in order to retain the exclusivity afforded by federal trademark registrations. This takes on additional complexities for franchisors—who need to make sure not only that no one is using their trademarks without authorization, but also that franchisees are making proper use of their marks.

For most companies, trademark monitoring is the task of examining the market for illegitimate, unauthorized, and otherwise negative references to a company’s trademarks. Potential threats can include:

  • Infringers (such as start-ups that have unwittingly adopted a similar name);
  • Counterfeiters (businesses that knowingly sell knock-off goods under your trademark); and
  • Dissatisfied consumers (who may take to social media to complain about your brand).

For franchisors, trademark monitoring also involves keeping tabs on use of the franchisor’s trademarks by its franchisees.

One of the fundamental components of a franchise agreement is a license for the franchisee to use the franchisor’s trademarks. With regard to this license, the franchise agreement will impose certain obligations and restrictions on how and where the franchisee can make use of the marks. Getting most franchisees to comply with these obligations and restrictions takes training and ongoing advisement.

When monitoring franchisees’ use of their trademarks, franchisors should look for:

  • LLC, corporation and trademark registrations in the names of franchisees (these should be prohibited by the franchise agreement);
  • Proper use of their trademarks (for example, referring to the franchised outlet as a “Pool Pro franchise”, and not “Pool Professionals”, and not saying “we are Pool Pros”);
  • Unauthorized domain names and social media accounts;
  • Appropriate use of advertising materials, company slogans, etc.;
  • Misleading advertising by franchisees; and
  • Consumer complaints from regions where franchised outlets are located.

Trademark monitoring is important for franchisors for several reasons. First and foremost, failure to monitor and enforce trademark rights can result in cancellation of the USPTO trademark registration loss of those rights altogether. Second, as alluded to above, trademark monitoring works to promptly identify and address infringers, counterfeiters and dissatisfied customers. Third, and specific to franchisors, franchisors owe a duty to their franchisees to make sure that their brand is protected. A big part of any franchise investment is the right to associate with the franchisor’s name and become immediately recognizable in the marketplace. If a franchisor loses control of its brand, this can have drastic effects for both the franchisor and its franchisees.

By effectively monitoring and enforcing their trademarks, franchisors can help ensure that their brands retain valuable, lasting and positive impressions in the marketplace.

Jeff Fabian is the owner of Fabian, LLC, a boutique intellectual property and business law firm serving new and established franchisors and franchisees. Contact the firm directly at 410.908.0883 or jeff@fabianlegal.com. You can also follow Jeff on Twitter @jsfabian.

This article is provided for informational purposes only, and does not constitute legal advice. Always consult an attorney before taking any action that may affect your legal rights or liabilities.

How Franchisees Can Grow Their Sales

However, once the ribbons come down and time passes, franchisees begin to recognize the challenge ahead and that, in many ways, they're on their own: regardless of the amount of support their franchisor provides, the franchisee is ultimately responsible for generating sales for his or her new business.

Running a Franchise from Home - Is it Right for You?

The U.S. Labor Department's Bureau of Labor Statistics recently con­ducted a survey of home-based businesses and estimated that there are just over four million self-employed, home-based workers. (The number of franchised businesses in this total was not calculated.) However, the National Association of Home-Based Businesses, in Owings Mills, MD, puts the number at closer to 50 million people. Whatever the accurate number is, it is a number that everyone agrees will only continue to rise.

Quantifying Yelp's Impact on the Restaurant Industry

Luca studied the effects of Yelp ratings on the revenue of restaurants and discovered several interesting findings. Studying the relationships of restaurants' revenues to their Yelp reviews in Seattle over a period from 2003 to 2009, he found a significant relationship between a restaurant’s average rating and revenue. One star’s worth of improvement on Yelp leads, he found, on average to an increase of between 5 and 9 percent in revenue. The average rating is more important than the review, as many Yelp users are overwhelmed by the sheer number of reviews on manyrestaurantpages and find it easier to consult the star rating. Luca also found two features which exacerbate the effect on revenue Yelp has. First, the more reviews a restaurant has, the more impact an increase in its Yelp rating will have on its revenue. Second, the more reviews by Yelp “elite” members, the more impact; “elite” reviews have almost twice as much impact as other reviews.