How to Franchising Your Trademark?

A trademark is a unique identifier that allows a person or company to distinguish themselves or their products. For the average consumer, a trademark represents the identity of the goods or service they want to purchase. Not only is a trademark important for consumers, but businesses without a trademark risk losing clients or earnings, as trademarks are necessary for successful commercial advertising.

How to Franchise your brand name?

A company’s trademark is more than just a distinguishing feature; it is also a reflection of its goodwill and a means of ensuring that an ordinary buyer does not mix it with another brand. According to Section 2(m) of the Trade Marks Act, 1999 (“Act”), a trademark can be a specific heading, label, name, brand, signature, word, numeral, a combination of colours, shape of goods, packaging, or any variety of the things mentioned above.

Any firm, large or small, wants to grow and thrive beyond its current confines. Franchising is the most popular strategy for businesses to develop outside their geographical boundaries. The Indian laws do not specifically address the details of franchising a business. They do, however, explore related topics such as licence and assignment.

What is licensing and assignment?

The two options for transferring trademark rights are licencing and assignment.  Assignments are irrevocable and permanent, whereas licences are temporary and revocable. The licence concept is commonly used to franchise a firm. The intriguing aspect is that the Act does not use the words licence or licencing. Nonetheless, essential Sections relating to the idea can be found in the Act when discussing a registered user’s rights.

Section 2(1) (r) of the Act outlines the idea of “permitted use,” which allows a registered user to use the trademark for goods and services. A registered user is a licensee when it comes to licencing.

Section 2(1)(r)(ii) more clearly refers to the use of the trademark by a person other than a registered user or registered proprietor for business purposes, with the approval of such user or proprietor or user and in accordance with the limitations and requirements imposed by the Act.

In addition, Section 48(1) of the Act, when read in conjunction with Section 49, states that a fully authorised written agreement is required for a registered user to use the proprietor’s trademark.

Moreover, Section 48 (2) states that the use of a trademark by legally authorized persons is not treated differently than the use of a brand by the proprietor in terms of the Act’s provisions. 

Section 52 of the Act also states that a registered user may file an infringement suit in his own name, just as a registered proprietor. Such registered users’ rights and duties will be treated parallel with those of the registered proprietor.

What is the importance of Agreement?

Because a trademark is inextricably linked to the reputation and goodwill of the brand it represents; therefore, it is critical to guarantee that the brand value is not lost as a result of the acts of any registered user, i.e. the licensee. Section 49 of the Act is the most important in this regard. A formal agreement is required by this provision. However, it assures that the agreement must specify how the licensor and licensee intend to handle the quality control issue.

This provision further states that while the licensee uses the proprietor’s trademark, the use should not give the impression that someone other than the proprietor is using it, because the purchaser will have a specific image associated with that particular brand in his mind.

What are the steps involved in the licensing process?

The following are required to be followed if a person wishes to franchise the business or obtain a licence for another’s business: –

1.Completing TM-P and the required papers, as well as any other documents and evidence/information requested by the Registrar.

2. A supporting affidavit is required to be prepared to spell out the relationship between the proprietor and the user, the degree of control, the time of use, and so on.

3. Drafting a licence agreement, which includes the details in the supporting affidavit and royalty terms.

4. Filling out the TM-P application form, either online or offline.

5. The Registrar may accept the application unconditionally or conditionally. Assume the Registrar’s acceptance is conditional. In that instance, the applicants are notified, and a hearing is held, following which the application may be accepted or dismissed entirely. When the application is accepted, the Registrar adds the proposed registered user to the register.

6. When the Registrar registers a new user, intimation is sent to all other registered users, if any. After completing the preceding steps, a licensee can begin carrying out the business.

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