A franchise can mean a lot of different things to different
people. To some, it is a gateway towards business ownership
with potentially less risk than going it alone. To others,
it's the ability to sell a product and provide a service which
has a level of quality associated with it. But, at the end of
the day, franchising starts with one basic element – a
license to use a trade-mark.
And, yet, I am constantly surprised by the number of first-time
franchisors who do not appreciate the value in obtaining trade-mark
protection for their name or logo, who are happy to keep their
fingers' crossed for the first few years and hope that nobody
else uses, or is already using, the same or similar name. The
trade-mark goes a long way in creating the value that is the
franchise system – it implies the support which franchisees
seek to have, and certifies the quality of that good or service
being sold and purchased. It's the beacon that tells
customers that there will be no surprises with this business
– it will provide the same reliable products and atmosphere
which they have come to expect elsewhere.
There are a number of advantages in owning a trade-mark that is
registered with the Canadian Intellectual Property Office. A
registered trade-mark gives the owner the right to enjoy the
exclusive use of that trade-mark in Canada, even if the mark will
not be used across the country. Trade-mark infringement of a
registered mark will be easier to establish than would be the case
under a common law passing off action.
A registered trade-mark also serves as notice of the public of
your ownership interest, and potential competitors who are diligent
enough to conduct a trade-mark search prior to conducting business
under a similar name or with a similar mark will be alerted to the
unavailability of your mark, or anything confusingly similar.
Registered trade-marks generally provide stronger protection
against a competitor, certainly, but also against a non-competitor
where their use of a similar mark may have the affect of
depreciating the goodwill associated with your trade-mark.
Further, as a licensor of a registered trade-mark, you can
exercise a sufficient degree of control over the character and
quality of goods and services sold in association with your
trade-mark, and registration of a trade-mark in Canada can entitle
you to trade-mark registration abroad.
The advantages of trade-mark registration are self-evident for
both franchisors and their franchisees who are licensees of the
mark, and should be considered a mandatory first step on the road
to franchising a business.
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.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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