The main and especially important factor that determines the success of a franchise transaction is the brand and trademark.

This article was consulted by Lawyer Nguyen Quang Trung

A strong brand will determine the franchise fee and the success of the franchise.

Therefore, intellectual property rights on trademarks play an important role and need to be carefully considered in franchise contracts. Below are some basic notes that the parties involved should consider.

1. Clear definition of trademarks

First of all, in a franchise contract, clearly defining the trademark is very important. The trademark is part of the business’s brand identity, along with the trade name, logo, slogan and other identifying elements. Accurately defining the trademark helps prevent future disputes about the use and protection of the trademark.

2. Trademark use rights

The franchise agreement should clearly stipulate the franchisee’s right to use the trademark. Typically, the franchisor will grant the franchisee an exclusive right to use the trademark within a specified geographical area. This should be clearly stated to avoid misunderstandings or disputes over future use rights.

3. Trademark use term

The franchise agreement should clearly state the period for which the franchisee is allowed to use the trademark. This period can be extended by agreement of the parties, but there should be clear terms on the conditions and procedures for extension. This ensures the interests of both parties throughout the cooperation.

4. Product and service quality

One of the key issues in protecting a trademark is the quality of the products and services provided under the trademark. The contract should clearly state the quality standards that the franchisee must comply with. The franchisor has the right to inspect and monitor to ensure that the products and services provided do not adversely affect the image and reputation of the brand.

5. Rights and obligations of the parties

The contract should also clearly stipulate the rights and obligations of the franchisor and the franchisee regarding the protection and enforcement of intellectual property rights. The franchisor is responsible for protecting the trademark, while the franchisee is required to notify the franchisor of any infringement they discover.

6. Trademark protection

Trademark protection is a shared responsibility of both parties. The contract should stipulate how to handle intellectual property violations, including legal action if necessary. In addition, the cost of these protection actions should also be clearly specified to avoid future disputes.

7. Dispute resolution

In case of a dispute involving intellectual property rights, the contract should have a specific provision stipulating how to resolve it, which could be through negotiation, conciliation or litigation. This will help the parties have a clear direction when problems arise.

8. General terms

Finally, it is important to pay attention to the general terms of the contract, including legal adjustments, conditions for contract termination, and ownership of intellectual property assets after contract termination. This not only protects the rights of the parties but also ensures transparency in the commercial relationship.