One of the first requirements for establishing a franchise system is to develop and adequately protect your company's "principal trademark." Not only is a strong and recognizable trademark a fundamental component of a franchise system, but the franchise's "principal trademark" must be included on the front page of the system's Franchise Disclosure Document (FDD), and it must be discussed in detail in Item 13 of the FDD.
Of course, a strong trademark strategy for any brand-centric enterprise will encompass registering and monitoring numerous trademarks as part of a comprehensive intellectual property portfolio. So, for companies with multiple trademarks, how do you decide which one is your "principal trademark" for purposes of the FDD?
Determining Your "Principal Trademark"
In most cases it will be pretty easy. In the franchise context a company's principal trademark is usually its pubic identity--the name or logo that appears on the company's website header, signage, menus, invoices and other materials and collateral.
But, if the company uses a design logo and a separate word-based trademark--think of McDonald's and its golden arches, for example--which one is the company's "principal trademark"? And, what if it uses a stylized word logo but also regularly emphasizes the trademark in plain text? In either situation, a case could easily be made that both trademarks are "principal."
Importance of Trademark Registration
A related consideration is that Item 13 of the FDD requires disclosure of whether the company's principal trademark is registered with the USPTO, and requires additional disclaimers for unregistered principal trademarks. Further, disclosure requirements aside, a franchisor will want to be able to demonstrate to active and prospective franchisees alike that the company is taking active measures to protect the licensed brand. As a result, with respect to the "principal trademark" in particular--but really with regards to all of the company's trademarks--it is critical for the franchisor to seek USPTO registration as early in the process as possible.
Related, and getting back to the issue of what constitutes the franchise system's "principal trademark," it is important to remember that multiple USPTO trademark registration applications may need to be filed for what to the lay person may seem like a "single" trademark. For example, where a trademark incorporates both word and design elements, it would not be uncommon for a franchisor to file three separate registration applications: one for the aggregate trademark, one for the stylized words only, and one for the words in plain text. Deciding which one is the "principal trademark," then, will require an analysis of the company's marketing, promotional and public relations campaigns to see what stands out as the primary means of identification for the brand.
Jeff Fabian is a trademark attorney who assists business owners in protecting their brands so that they can stay focused on running their businesses. Visit www.fabianip.com for more information, and follow Jeff on Twitter @FabianOnIP.
This article is provided for informational purposes only, and does not constitute legal advice.