Trademark Licensing And Franchising Agreement

A license is a legal relationship in which a party called a “licensee” grants the other party, known as a “licensee,” the right to use or benefit from a trademark, technology or other legal rights. Examples of licences are: It is also important to note that a trademark registered by the Federal Government is not required to complete this element. The use of a single commercial name or commercial garment may be sufficient to meet the brand`s requirement. Think of Calvin Klein, for example. Every time you buy a pair of Calvin Klein underwear, you buy a licensed product. Calvin Klein doesn`t do underwear. The benefits of a brand license are visible if you see an avenger movie, buy a college basketball t-shirt, buy frozen waffles at Pillsbury or drink Hersheys chocolate milk. In any case, you buy a branded product that was not manufactured by the brand owner. If any of these controls are in place, it is likely that the business will be classified as duty-free for the purposes of the federal rule. On the other hand, licensees do not use any of these controls. They can only protect their brand through quality control and site inspections. The licensee cannot choose the new location, provide an instruction notice or control all products sold by the licensee. The licensee cannot communicate to the taker the services or products he offers (or does not provide), cannot give advice on the management of the business or control the appearance of the business.

However, the licensee may require that the purchaser improve the quality of the products sold, but that the donor cannot require the purchaser to order the products from a specific supplier. You should speak to one of our lawyers if you have any questions about licensing a trademark or creating a franchise. Payment is generally a common feature between licensing and franchise agreements. This is a subject of much discussion when the courts analyze the distinction between licensing and franchising agreements. The payment of the royalty is satisfied if the franchisee pays the franchisor or one of its related companies more than $500 within six months of the opening of the business. The types of payments included in this calculation are rental, deductible fees, advertising assistance, training, bonds, trust deposits, payments for services, current royalties, advertising literature and non-refundable accounting fees. (c) Payment of an initial fee – you will receive a down payment or a fee, that is, at the time of issuing your licence or entering into a contract, you will receive a fee, i.e.: You will receive a deductible fee, licence fee, inventory fee or whatever you call. There is a difference between a franchise and a brand`s license. However, some companies make the mistake of conceding a trademark in a way that unintentionally creates a franchise. The accidental creation of a franchise imposes additional legal obligations on the franchisor, which owns the franchise.

Failure to comply with additional legal obligations can impose heavy penalties on the trademark holder. It is tempting for entrepreneurs who are interested in developing their concept to skip the needs of franchising and offer a licensing opportunity instead. Without knowing the risks, it seems that licensing can be a more affordable and simpler option. But before it makes this decision, it is important to consider the intentions of how and why the company will grow. If the company wants to have one of the controls listed above, there is no doubt – the company cannot license its brands as an alternative to franchising.