Franchise Article Series: Franchising and Intellectual Property
This article is part of a series of articles that document some key considerations about franchising, including some of the pitfalls and the opportunities which our firm has seen and advised upon over the past two years.
The British Columbia Franchises Act came into force February 1, 2019 (the “Act”). Since the enactment of this legislation, the Franchise Law Practice Group at Pushor Mitchell LLP has helped franchisors and franchisees navigate the Act, ensuring that those interested in operating a franchise business are compliant with the legislation’s many requirements so that they can focus on what is most important: running a successful business!
In one of our previous articles, we discussed the importance of a franchise disclosure document and how it is intended to summarize and disclose all material facts regarding a franchise to any prospective franchisee. One element of this disclosure relates to the intellectual property of the franchisor. Under the British Columbia Franchises Regulation, a franchisor must disclose “a description of the rights the franchisor has to the trademark, trade name, logo or advertising or other commercial symbol associated with the franchise.”
Generally speaking, a trademark is a symbol, word, design, slogan or logo used to distinguish a brand or product from others. A trademark serves to differentiate one business (franchise) from another and to identify the source of the products and services that the business offers. Trademarks are very important and often assist consumers in recognizing the brand of a certain business.
Under the terms of a franchise agreement, a franchisor usually grants a franchisee with the ability to use the franchisor’s trademarks. While a franchisee will not own the trademark (these rights remain with the franchisor), a franchisee can use the franchisor’s trademarks in operating a franchise.
As a franchisor, any trademarks should be registered under the Canadian Trade-Marks Act, which results in the reservation and protection of a franchisor’s trademarks across Canada. Otherwise, a franchisor might not have the exclusive ability to use a trademark, which could greatly diminish the value of a franchise. Franchisors need to be attentive in protecting their trademarks and should ensure that franchisees only use trademarks pursuant to the terms of the franchise agreement. In addition, a franchisor should ensure that no unauthorized third parties are using their trademarks.
Often, when first consulting with prospective franchisors, we will concurrently advise and assist them with the registration of their trademarks while we prepare the franchise documentation (this process can take over a year from start to finish). This process should be done as soon as possible to ensure that a franchisor’s intellectual property (and essentially, the value of their franchise) is protected.
At Pushor Mitchell LLP, our Franchise Law Practice Group is happy to assist business owners and potential franchisors with protecting their intellectual property as part of the franchising process. Should you require assistance, please contact any of the members of our Franchise Law Practice Group.
This article is provided as information only and should not be construed as legal advice. Always consult with a lawyer to provide you with advice specific to your own situation. For more information, please contact any member of the Franchise Law Practice Group at Pushor Mitchell LLP by calling (250) 762 – 2108 or visiting our website at www.pushormitchell.com.