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Franchisors Should Stand by Trademarks


I made this observation on Twitter recently. Franchisors should stand by their trademarks.

What? Why would you say this? Doesn’t every franchisor stand by their trademarks?

No. No they don’t.

If you look closely at your franchise agreement, it is very likely the franchisor will not indemnify its franchisees against trademark infringement by third parties. This means the franchisor isn’t willing to protect its franchisees from challenges to the name of the franchise and its brand. Franchisees are really buying two main things from a franchisor. One is the system. And the other is the license to the name or brand.

If your franchise won’t indemnify, defend and hold you harmless from trademark infringement, you should negotiate to have such a clause inserted into your franchise agreement. And if your proposed franchisor won’t agree to it, then perhaps you should think twice about whether this is a franchise for you.


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