The Top 5 Most Common Trademark Mistakes By Franchisors

May 4

As a franchisor, you have worked hard to build a brand and reputation. However, not properly protecting your trademark can put all of that effort at risk. In this article, we will discuss the top 5 common trademark mistakes made by franchisors and how to avoid them.

1. Failure to Conduct a Comprehensive Trademark Search

The first and most common mistake made by franchisors is failing to conduct a comprehensive trademark search before selecting a trademark. Conducting a comprehensive search is essential to ensure that the trademark is available and does not infringe on any existing trademarks. You may be forced to rebrand if you fail to conduct a comprehensive clearance search.

It is not uncommon for franchisors to have franchise offers before their trademark registers. However, speaking from experience, nothing kills a franchise’s momentum more than having to rebrand after having sold multiple franchises. Firstly, franchisees may develop a negative impression that the franchisor is careless about protecting their brand. This could result in franchisees losing confidence in the franchisor's ability to manage the franchise system, ultimately leading to a decline in the franchise's reputation and profitability.

Secondly, the franchisor could face legal challenges from other trademark owners, resulting in costly litigation that could harm the franchisor's finances and reputation. Thus, a comprehensive trademark search will identify any potential conflicts with existing trademarks, which can save franchisors from costly litigation in the future.

2. Not Registering the Trademark

Another common mistake made by franchisors is not registering their trademark. Trademark registration is crucial to protect the franchisor's brand and prevent competitors from using a similar trademark.

Ultimately, a franchise agreement is a trademark license agreement that permits someone to use the franchisor’s brand name and business system. A trademark registration gives the franchisor the exclusive right to use the registered brand name nationwide. It also enables franchisors to take legal action against infringers and seek damages.

It is important to remember the more efforts franchisors take in protecting their brand, the more likely franchisee candidates will have a high degree of confidence that they are investing in a focused and serious brand as their franchise.

3. Using Generic or Descriptive Terms as Trademarks

Many franchisors make the mistake of using generic or descriptive terms as their trademark. In trademark law, descriptiveness refers to a mark describing the goods or services it identifies (ex. “Salty” for a potato chip brand). These types of marks are challenging to protect, and competitors can easily use them to their advantage.

A strong trademark should be distinctive and unique, making it easier to enforce and protect. Therefore, franchisors should avoid using generic or descriptive terms as their trademark and instead focus on creating a distinctive and memorable mark.

4. Allowing Unauthorized Use of the Trademark

Franchisors must take steps to ensure that their trademark is used appropriately by franchisees and other third parties. Unauthorized use of the trademark can dilute the brand's value, cause confusion, and damage the franchisor's reputation.

Franchisors should have clear guidelines on how the trademark should be used and monitored to prevent unauthorized use. It is essential to take legal action against any unauthorized use of the trademark to protect the franchisor's brand and reputation.

5. Failing to Monitor and Enforce the Trademark

The final and most crucial mistake made by franchisors is failing to monitor and enforce their trademark. Trademark infringement can occur in many ways, including counterfeiting, cybersquatting, and unauthorized use.

Franchisors must monitor their trademark regularly and take immediate action against any infringement.

If you need assistance with franchising and intellectual property matters, our team at Charter Law is here to help. For more information on how to build your brand, call Charter Law at (888) 644-1997 or email us at Info@CharterDifference.com.