It is the duty of the Franchisor to register and protect the trademarks subject to the licence granted in terms of the franchise agreement. Generally, a Franchisor should attempt to protect its trade marks as broadly as possible. By doing this, a Franchisor strengthen its rights in a trade mark which will place it in a better position to avoid and/or successfully prevent third parties from passing off or copying its trade marks in any manner.

Trademarks are also regarded as corporate assets of a business and a widely registered trade mark portfolio should assist in justifying a possible higher franchise fee. A solid and strong trade mark portfolio should add value to the business and lower possible risks of the Franchisor. It is recommended that a Franchisor guarantee its ownership in the trade marks, or provide details of such registrations for certainty in the franchise agreement.

Trademarks are registered on the Trade Marks Register. There is no cross-referencing between the Trade Marks Register, Close Corporation or Companies Registers and any Domain Name Registers. It is recommended that Franchisor businesses register their business name and pertinent trade marks on all these separate registers to avoid possible conflicts and properly secure its rights.

The Franchisees should further be restricted and discouraged from registering the Franchisor’s business name or any of its trade marks, as whole or as parts, of its close corporation or company registration, or possible separate website addresses. Most franchise agreements include restraints of trade. The express restrictions on the unauthorised use or registration of the franchise intellectual property by Franchisees are recommended.

Marks which are eligible for trade mark protection include business names, domain names, slogans and logos which are distinctive. Some Franchisors consider it sufficient to register their main business name as a trade mark. However, slogans, logos, icons, signatures, combination of colours, and banners could also qualify as trademarks, if they are sufficiently distinctive.

It is recommended that Franchisor businesses should instruct attorneys to conduct trade mark audits from time to time to ensure that all trademarks used in trade are adequately protected. You are welcome to consider instructing our firm to assist with any matters relating to the following aspects relevant to franchising:

• Drafting of new Franchise Agreements to comply with CPA Regulations
• Update of existing Franchise Agreements to comply with CPA Regulations
• Review of Franchise Agreements on behalf of Franchisees
• Conducting IP due diligences
• Conducting trade mark audits
• Registration of trade marks, patents and designs
• Registration of Companies

Reference: Stegmanns Incorporated