Role of Trademarks in Franchising | Why is it Important?

 

It is critical to provide solid trademark protection at the start of every new franchise. Not only because it is a legal requirement of most franchising agreements, but also because the role of trademarks in franchising assures that each partner can safeguard their distinct interests in the future.

 

What is a trademark?

Trademarks are identification marks that identify the source of specific goods and services.

Trademark registration online provides the owner with the exclusive right to use it in connection with certain goods and services. 

To get a registration, the trademark owner must submit applications to the relevant intellectual property offices in specific areas, detailing the goods and services for which they seek exclusive use of the mark.

 

What is franchising?

Trademarks, like patents, are IP assets that can be licenced by third parties.

Franchising is a type of trademark licencing in which a company (the franchisor) licences one or more people (the franchisees) to market a product or service under the franchisor's trademarks, trade secrets, and trade dress.

Both franchisors and franchisees can benefit greatly from franchising.

Franchising can be a great option for franchisees to start a new business. Franchisees get the option to trade under a well-known brand and have access to a business model and, in certain cases, trade secrets (think of food or drink recipes, know-how, supplier lists, and so on) that have already been tried and proven effective by the franchisor.

Franchising may be a very effective technique for franchisors to generate cash and expand internationally. Franchisees will often pay royalties to franchisors every month.

 

What is the role of trademarks in franchising?

The following are the different characteristics that a trademark should have, which are usually a combination of awareness and creativity:

 

Simple to say and remember

The name or logo should be simple to say and remember. Customers' attention spans are quite short. Furthermore, in today's fast-paced world, people do not have enough time to recall a company's name. 

In this case, the trademark functions as a motivator for people to remember and buy your product. 

It is one of the reasons for the 'KFC' product's success. We can find a large number of KFC fans, but if we search for people who know the full name of KFC (Kentucky Fried Chicken), we may be surprised by the results.

 

Provide information about your company 

Try to include information about the types of products or services that are available. It improves your ability to sell. The names KFC (Kentucky Fried Chicken), Pizza Hut, Jus Booster Juice, Fitnessone, and Make My Trip.com symbolise the products and services they provide.

 

Use of symbols

Because symbols are easy to recall, they can be useful at times. McDonald's, which has a global reach, may be easily recognised by its golden arches.

 

Simplicity is key

The trademark should be basic enough to stick in the mind of the person. The Greek Goddess's wing is represented by the Nike swoosh. It's a great example of a company's corporate brand becoming more simplified as its frame grows. This checkmark has been in use since the 1970s, and it is now more recognisable than the company's name.

Aside from this, trademarks should be concise and appealing. It should be simple to spell and to write legibly. With a little imagination, one may make their brand intriguing.

 

Trademark is indestructible

Once a trademark is registered, it can be used indefinitely. Any trademark that a company registers is theirs forever. Yes, every ten years, the trademark registration must be renewed. The brand's identity, on the other hand, will last forever.

 

What are the Benefits of Trade Mark Registration for Franchising?

It is vital for franchisors to analyse and defend their trademarks at the start of a franchise agreement, as well as on an ongoing basis as the franchise grows.

Furthermore, franchisors should ensure that they are in a strong position to enforce their trademark rights against potential franchisees who do not follow the terms of the agreement. Such as if a franchisee uses the role of trademarks in franchising for goods or services that are not approved in the agreement without permission. 

To provide a consistent customer experience, a franchise agreement can include conditions governing the use and presentation of the brand.

Indemnifications against liability for infringement of third-party rights should also be sought by franchisees.

 

Creating a Trademark for Your Franchise System

Many franchisors have multiple trademarks, but the law may not allow you to protect all of them.

Generic or descriptive names, such as "Computer Repair Service" and "Best Carpet Cleaners," as well as names that contain a location, such as "Utah Beauty Shop," are difficult to copyright. 

Suggestive marks, such as Greyhound and Citibank, that imply anything about the goods or services, are usually eligible for registration. Fanciful or made-up names, like Xerox and Kleenex, and arbitrary names, like Apple for computers, are usually the greatest candidates for trademark registration.

 

Importance of Trademark in Franchising

Purchasing a franchise rather than starting your own company is a good approach to get started with your own company. Even though it necessitates a number of factors to be considered, such as items and services, funding sources, working hands with working skills, location, promotion, and so on. 

In such large projects, it's easy to overlook the logo or trademarks. Customers create a sense of ownership with the company because of trademarks. A customer may not recognise the company's owner, but he or she will remember the company's emblem. This is the Role of Trademarks in Franchising.

McDonald's golden arches, Nike's swoosh, KFC, The Yellow Chilly, Bata, Raymond Limited, and S Kumar are some of the best examples of this category. 

There are also some business owners who have built a reputation for themselves in the market by using their own name as a brand. 

This category could be reserved for the Shahnaz Group of Companies and the Anil Dhirubhai Ambani Group (Reliance is the brand name). 

 

Conclusion

Trademark registration online gives the owner an exclusive right and distinguishes the product from comparable products sold by other companies. For the owner, a trademark serves as an intangible asset that protects the brand for a long time. 

The owner of a trademark has the exclusive right to use such phrases, logos, and slogans. It is critical for a brand to safeguard and safe in a market like India. As a result, having a trademark registration in India is vital not because it is mandatory but because it is necessary.