Canada: Brand Enforcement For Franchisors: Legal And Strategic Implications

Last Updated: October 5 2012
Article by David Spratley

Previously published in the Franchise & Distribution Journal (Volume XVII, No. 2).

Brands are a crucial element of any successful franchise system, and brand enforcement is very important for franchisors. However, there are many important issues and strategies to consider before taking steps to enforce a brand. Doing things incorrectly creates reputational and legal risk for the franchisor and its franchise system, and franchisors are well advised to think things through carefully and do some due diligence before firing off cease and desist letters or making demands.

Many of us know that pork is the "other white meat," even if we do not know why we know. This is a testament to branding: THE OTHER WHITE MEAT is a trade-mark owned by the U.S. National Pork Board, and obviously it is used to good effect. Given the mark's value, the Board takes care to protect and enforce its brand. But these examples of the Board's enforcement activities demonstrate the two sides of the brand enforcement coin:

  • The Board prevented the registration of THE OTHER RED MEAT in the United States in association with salmon. The Board successfully argued that its famous trade-mark would be "diluted" if the other mark was registered.
  • On April 1, 2010 (note the date) posted an article about its latest product: canned unicorn meat. The tag-line was "Unicorn – the new white meat." The website promptly received a 12-page cease and desist letter from the Board's lawyers.

Franchisors should understand the reasons for brand enforcement, and the risks involved.

Why Brand Enforcement Matters

Brands are valuable business assets that can lose their value if their underlying trade-mark rights are weakened or lost. Brand enforcement involves protecting those assets.

A franchisor's brands are closely associated with, and a crucial component of, its system. Having strong brands strengthens the system by solidifying its public reputation, which can also make the system more enticing to potential franchisees. However, consumers may be confused if different parties use identical or similar brands with similar products or services, as the public will not know whether those products or services come from the franchisor's system. If the other party's products or services are low-quality and the public think they are associated with the franchisor's system, that can actively harm the system's reputation. And if the confusing use continues, the original brand may no longer be "distinctive" because it is no longer associated with a single source. Marks that are not distinctive are difficult or impossible to enforce, and therefore, weaker and less valuable.

The key question becomes: when are marks, or their associated products or services, similar enough to create confusion? Identifying situations where there is no confusion between two dissimilar businesses is straightforward – for example, Apple Computer and Apple Auto Glass both have apple based brands but no one will think that a windshield repair shop is owned by or affiliated with Apple Computer. Similarly, if an identical brand is used for identical wares or services, then there's a clear infringement.

Franchisors get most nervous where brands are similar and there is some overlap between the businesses, but it is not an obvious infringement. Generally, a franchisor who sees a similar brand being used in an identical market should seriously consider enforcement; if the market overlaps but is not identical, there is still good reason to consider taking steps to protect a brand.

The rationale behind brand enforcement should be clear, as should the reasons that brand owners sometimes take action that seems illogical to the uninitiated. In reality, however, brand owners are often caught in a "damned if you don't, damned if you do" dilemma regarding brand enforcement.

Damned if You Don't

Franchisors should be vigilant about other businesses using identical or similar brands. As discussed, if someone uses an identical or similar mark, because the public gets conflicting messages as to source, this can destroy a brand's distinctiveness and value.

The problem can snowball if left alone. If another party's use goes unchallenged, the franchisor may have more difficulty preventing further parties from moving into the same brand space. Those subsequent users can point to the first two marks and say "if those marks can coexist without confusing consumers, then my mark can do the same," or "because these two marks have coexisted in the same space, the first mark is no longer distinctive and cannot prevent my mark from entering that space." A franchisor in that situation can have serious difficulty preventing other parties from using conflicting brands.

A franchisor who fails to monitor and enforce its trade-marks can find its trade-mark rights substantially weakened or even lost. This is why brand enforcement is important, and why brand owners often try to stop activities that may not seem problematic to those unfamiliar with trade-mark matters.

Damned if You Do

The risks of failing to protect brands are clear. However, brand enforcement also brings public relations, reputational, and legal risks. Take the National Pork Board's response to the canned unicorn spoof – the Board has every right, and very good reason, to protect its brand, but it ended up looking foolish in this particular instance.

Consider this other example: in 2003, Starbucks sent a cease-and-desist letter to a small café called HaidaBucks (located in a remote town in British Columbia and owned and operated by members of the Haida Nation). The café owners went public and received an outpouring of support (mirrored by an outpouring of condemnation directed at Starbucks), including legal assistance from a prominent local firm. Eventually Starbucks dropped its attempts to have the café change its name.

The problem for brand owners is that the general public does not necessarily appreciate that trade mark rights can be lost through lack of enforcement. And brand owners are often portrayed as bullies when they try to enforce their rights against smaller entities. Astute "targets" can leverage this perception to their advantage. Public popularity does not affect trade-mark disputes, but brand owners can take reputational damage while trying to protect their brands, which in turn can affect their brands' value (which is what they are trying to protect in the first place).

Things to Consider when Enforcing Your Brands

Clearly, franchisors must protect their brands. However, doing so can lead to negative publicity and reputational harm. What are prudent franchisors to do? There are many issues to consider before taking steps to enforce a brand, as discussed below.

Some business risk analysis is helpful. What are the risks of letting the other party use its brand? Does it directly compete with the franchisor's system? If not, do either party's areas of natural expansion include more directly competitive fields? Is the franchisor's brand a key brand or is it associated with a minor aspect of its system? And what about the other party's brand – they may fight tooth and nail to preserve a key brand but be more willing to give up a minor one. And how much time and money has each side put into establishing and promoting its brand? A party that has had a splashy launch party for a new brand will likely be unwilling to abandon the brand at the first sign of trouble.

Legal risk analysis is also crucial. How strong are the franchisor's marks? Are they highly distinctive, or made of common or descriptive words? Are they well-known enough to be considered "famous"? Famous marks get extra protection beyond the specific products or services with which they are associated, and owners of famous marks can prevent others from using brands in unrelated spheres if such use will "dilute" the famous mark by reducing its selling power. The National Pork Board successfully opposed the registration of THE OTHER RED MEAT in the United States on this basis by demonstrating that its mark was famous, and convinced the tribunal that this mark would be diluted if the other mark was registered. In Canada, franchisors who can prove that their marks are "famous" might be able to prevent the use of similar marks in unrelated areas of business.

Are the franchisor's marks registered, or will the franchisor have to rely on its common law rights? A franchisor can enforce a registered trade-mark across Canada regardless of where the franchisor actually uses the mark. Unregistered marks, on the other hand, are enforceable only in geographic regions where the owner can prove it has developed a reputation in association with the mark.

Similarly, how strong are the other party's marks? Are they registered, or is there a pending application that the franchisor might be able to oppose? If the mark is registered already, the franchisor will have to consider applying to have it expunged from the trade-marks register. How much, and where, does the other party use its marks?

Another crucial question is the relative strength of the marks. Even if the franchisor has trade-mark registrations, if the other party has superior rights due to prior use, then the franchisor's attempts to enforce its brands can backfire. Receiving a response to a demand letter saying "we've been using our mark for much longer than you have used your mark, so if they are indeed confusing, as you allege in your demand letter, then you are infringing our rights" is obviously not a happy event.

Franchisors should also consider the cost of enforcement – and that means the entire enforcement process, not just the initial demand letter. Sending a demand letter does not cost much, but few parties capitulate immediately on receiving one. How far is the franchisor willing to escalate beyond an initial demand? Will it launch a lawsuit? Will it actually carry through with a lawsuit if the other side resists? What kind of negotiated solution might be acceptable? These are all things to consider before sending the first demand letter.

The franchisor should also decide what it wants to accomplish. Does it want the other side to stop using its brand completely? Does it want the brand, or how the other party uses the brand, changed slightly or significantly? Does it want to create a licensed use, where the other party can use the mark under licence from the franchisor? Does it want the other side to pay profits, or damages, or legal fees? These considerations will significantly affect enforcement strategy.

The franchisor must also consider its reputational risk. If the dispute is publicized, how will the franchisor and its business look? Parties who receive demand letters are often not shy about posting them on the web or talking to the media. The franchisor might be prepared to take on some reputational risk to protect key brands, and a local PR backlash might be acceptable if enforcement results in a stronger overall brand. On the other hand, if there is little risk that the other party's activities will seriously affect the franchisor's brand, then the cost and potential negative publicity of enforcement may not be worthwhile.

The last legal risk to consider is how the other side is likely to respond. A party who receives a demand letter might go to court in its home jurisdiction for a declaratory judgement that it does not infringe the franchisor's marks. This can suddenly draw the franchisor into litigation in a jurisdiction not of its choosing, where the franchisor has lost home-court advantage. And if the franchisor never intended to sue and was merely hoping to scare the other party off, suddenly it must seriously consider getting engaged in the litigation because a formal declaration that the other party does not infringe could be more damaging to the brand than the other party's mere use of its brand.

Finally, if the franchisor decides enforcement is appropriate, it should still think about what form of enforcement is best. Should there be a formal demand letter from the franchisor's lawyers? A business-to-business letter from the franchisor? A less formal phone call? And what tone is appropriate? Each approach sends a different message and may lead to different results.

Keeping Your House in Order

There are clearly many issues for a franchisor to consider before enforcing trade-mark rights. Some of them depend on the other party or other outside circumstances. However, many of them depend on the franchisor's organization and preparedness. Because brands are a key part of the franchise system, the franchisor should have an organized and consistent branding strategy. The franchisor should select brands that are strong and distinctive, and should investigate whether there are conflicting existing brands before adopting a new brand. Once the franchisor has selected a brand, it should protect that brand by obtaining and maintaining trade-mark registrations, using the brand consistently, and ensuring that its franchisees have proper trade-mark licences and only use the brand in accordance with that licence and with the franchisor's other requirements. These are all elements within the franchisor's control that will put the franchisor in a stronger position to enforce its brands if it becomes necessary to do so.

Final Thoughts

Brand enforcement is an important issue for franchisors, but there are many things to consider regarding when and how to enforce a brand. Franchisors should be vigilant for conflicting brands in the marketplace, but should do their homework and think things through carefully before taking steps against any such conflicting brand.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.