How to terminate a franchise agreement
Although a franchisor will give you the tools,...
We all know how vital brand recognition is to being a successful franchise business. And anyone who knows that also understands the steps that need to be taken to protect the exclusivity of your brand, and the legal steps that need to be taken to ensure you can enforce it against imitators.
One of the best ways to establish your rights to your brand is to register a trade-mark for your name, logo or other distinguishing feature. A trade-mark is a distinctive image that will identify your franchise business, product or service.
Big changes are coming to Canadian trade-mark law. Early in 2014, the federal government proposed sweeping reforms to the Trade-marks Act as part of its Economic Action Plan 2014 Act, No.1 (better known as Bill C-31). Some changes are only cosmetic – "trade-marks" will (finally) be spelled as "trademarks", removing the hyphen in the name, and "wares" will become reclassified as the more commonly used term "goods." But other changes have the potential to redefine the landscape of Canadian trade-mark practice.
The Madrid Protocol is an international treaty that permits "trademark" applicants to submit one application to multiple jurisdictions for registration at the same time. This will help make the protection of your franchise business trademarks more accessible abroad, and foreign companies looking to expand into Canada will have an easier path to gaining trademark protection within our borders.
The Nice Convention is an international treaty that provides for a classification system of goods and services when submitting a trademark application, rather than the free-verse style of description that we use in Canada today. It remains to be seen whether additional fees will be incurred on an application on a class-by-class basis, but it is foreseeable that this development may be more costly to applicants, despite the benefits of inserting some more predictability into the process.
The most radical forthcoming change (if Bill C-31 is passed as currently drafted) is to the use requirements. As it stands now, trademark applicants need to provide evidence of actual use of a trademark in order to obtain registration, but Bill C-31 removes this barrier. This would mean that, so long as an applicant could demonstrate intent to use the trademark, proof of actual use wouldn’t be required; meaning that we may very well see lots of squatters filing trademark applications to reserve the mark, even if they may not actually ever use it. This would deprive actual users of these trademarks the right to registration. Effectively, the change opens the door to bad-faith trademark registrations, where a party never intends to use the mark but wishes to encumber the claim of someone who is already using the unregistered trademark (or has plans to). Some have called these "trademark trolls" and their impact on the Canadian trademarks landscape may be severe.
Franchisors would do well to plan well in advance and apply for any trademarks they may potentially use in their franchise business, even if such plans are in the distant future. Franchise businesses should also be vigilant and call upon their legal advisors to monitor the Trademarks Journal closely for potentially similar marks with a view of opposing these bad-faith trademark applications.
Learn more about franchise business opportunities in Canada at Be The Boss.
Email Rob Lancit, President of BeTheBoss.ca if you have any questions about trademarks and your franchise business.
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