Trademark Licensing: Avoiding the Accidental Franchise

56 Pages·2016·1.37 MB·English

by  Erika Simon

Presenting a live 90-minute webinar with interactive Q&A
Trademark Licensing: Avoiding the
Accidental Franchise in Structuring Licenses
Navigating Differences Between Trademark Licenses and Franchises, Avoiding Naked Licenses
THURSDAY, OCTOBER 13, 2016
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
Today’s faculty features:
Kenneth R. Costello, Partner, Bryan Cave, Santa Monica, Calif.

Mark Kirsch, Principal, Gray Plant Mooty, Washington, D.C.

Rochelle (Shelley) Spandorf, Partner, Davis Wright Tremaine, Los Angeles
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Trademark Licensing:
Avoiding the Accidental Franchise in
Structuring Licenses
OCTOBER 13, 2016
Ken Costello, Bryan Cave
Mark Kirsch, Gray Plant Mooty
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Rochelle Spandorf, Davis Wright Tremaine LLP
Discussion Points:
 Why does franchise status matter?
 What is a franchise (and a brief word about business
opportunities …)
 Accidental franchises in practice
 Strategies for drafting licenses and distribution
agreements to avoid inadvertent franchises and other
approaches to reduce franchise liability risks
 Q&A
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Why Does Franchise Status Matter?
7
Why Franchise Status Matters:

 Franchises are subject to extensive regulation
that licensors of non-franchise TM licenses
bypass
 Federal and state franchise sales laws – “front
end”
Regulates the sales process

Public disclosure of financial statements

Personal liability for top management

 State relationship laws - “back end”
Must have “good cause” to end a franchise relationship

Some statutes impose other substantive contract terms


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Why Franchise Status Matters:

 Non-franchise TM licenses are private, consensual
 No public disclosures about financial condition or
other sensitive information
 No “front end” or “back end” laws regulate how TM
licenses are formed or may end. Non-franchise TM
licenses are “at will” arrangements allowing a TM
licensor to terminate on X days notice = enforceable
 No personal liability if a entity party breaches the
contract

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U.S. Laws Regulating Franchises and Bus/Ops
 Franchise Sales Laws (‘front end” laws)
Federal – Amended FTC Rule applies in all 50 states: presale

disclosure, but no federal filing; no private right of action, but plaintiffs
may have state unfair business practice claim based on violation
State – Registration + disclosure duties in select states; private right

of action
 Business Opportunity Laws (‘front end” laws)
Federal – exemption for franchises that comply with FTC Rule

State – presale disclosure + registration/review; private right of action

There are more states with Bus/Op laws than franchise laws

 Franchise “Relationship” Laws (“back end” laws)
No federal law; state laws only

Good cause for termination, cancellation or non-renewal

A handful of states also forbid substantial changes to distribution

arrangement even when contract permits
Statute trumps contract

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