Trademark Licenses and Accidental Franchises
Navigating Differences Between Trademark Licenses and Franchises, Avoiding Naked Licenses

Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Trademark and Copyright
- event Date
Tuesday, August 17, 2021
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will examine the differences between trademark licenses and franchises and provides best practices for structuring licenses to avoid inadvertently creating a franchise agreement. The panel will also discuss best practices for avoiding a naked license, complying with franchise laws if an inadvertent franchise has been established, and minimizing vicarious liability exposure based on the activities of licensees.
Faculty

Ms. Spandorf is a nationally recognized business franchise and distribution attorney with more than 40 years of experience representing franchisors, manufacturers, licensors, suppliers, franchisees, and distributors in their domestic and international expansion and strategic development. She concentrates her practice on a broad spectrum of transactional and regulatory issues for clients in all industry sectors, from startups to mature public companies. Ms. Spandorf assists clients with their contracts and legal compliance including preparing franchise disclosure documents, domestic and international franchise and distribution agreements, and registration filings. She counsels franchisors, suppliers, and trademark licensors on a broad array of operating issues ranging from contract enforcement to trademark protection, relationship disputes, antitrust and pricing matters, terminations and transfers, mergers and acquisitions and implementation of system-wide changes. Ms. Spandorf represents U.S. franchisors in their international expansion activities and helps foreign franchisors bring their franchise system into the U.S. She assists companies in the acquisition and sale of franchise systems or franchise units by providing franchise due diligence reviews and lead counsel services. On behalf of franchisees and area developers, Ms. Spandorf assists with the acquisition and sale of franchise rights and various transactional assignments. She is one of ten attorneys in the United States ranked by Chambers USA in its highest category (Band One) of leading U.S. franchise attorneys. Ms. Spandorf is recognized as a certified specialist in franchise and distribution law by the California State Bar. She has the distinction of being the first woman to chair the ABA Forum on Franchising, the nation's preeminent association of franchise attorneys, and has twice chaired the California State Bar Franchise Law Committee in North America. Ms. Spandorf is a frequent speaker and author on franchise topics and resource to the press on franchise issues. She was named by her peers as a 2022 “Lawyer of the Year” in the franchise law category in Best’s Lawyers, and has consistently been recognized as a “Global Elite Thought Leader” in franchise law in Who’s Who Legal USA, another annual peer ranking.

Mr. Marks has experience in a broad range of transactional matters, initial formation and capitalization, licensing, venture capital financing, debt financing, intellectual property protection and licensing, stock and asset acquisitions and divestitures, and strategic transactions. He counsels clients in the spectrum of franchise and distribution law, including structuring new domestic and international franchise and licensing programs, franchise registration and disclosure matters, terminating and renewing franchise relationships, negotiating complex multi-unit transactions and transfers, and assessing the applicability of federal and state franchise and business opportunity laws. He is certified by the State Bar of California as a Franchise and Distribution Law Specialist.

Mr. Kirsch focuses his practice on domestic and international franchising and distribution matters. He represents and counsels clients on various corporate, commercial, licensing, franchise, and business development matters. His work involves primarily transactional and regulatory matters, M&As, international franchising, and distribution. Mr. Kirsch often lends his franchise expertise to others by writing articles and speaking at seminars about a variety of issues including branding, licensing, franchising, and distribution issues.
Description
Trademark licensing is a highly popular business practice utilized by companies in all industry sectors. Trademark licensing enables a brand owner to broaden public exposure for their brand by authorizing third-party licensees to sell branded goods and services, which, in turn, produces revenue for the licensor in the form of royalty fees. One of the hallmarks of an enforceable trademark license is that the trademark owner retains sufficient control over the quality of the goods or services that a licensee produces under the license in order to avoid being deemed to have abandoned their trademark rights. If a trademark owner fails to maintain control over the use of the mark, the licensor could lose all rights in a trademark. This is known as a naked license.
Counsel must also understand the subtle difference and overlap between trademark licensing and franchise law. Franchises are a special subset of trademark licenses. Appreciating the distinction between franchise licenses and non-franchise licenses is essential because the accidental or unintended creation of a franchise may subject a brand owner to complicated and demanding franchise laws. Significant consequences, including damages, rescission, fines, and penalties, can flow from noncompliance with franchise laws. Franchise statutes impose personal liability on a franchisor’s owners, officers, directors and key management, and violating franchise laws is potentially punishable as a felony (although criminal prosecution is rare).
The razor-thin line separating the quality controls that a trademark owner must retain to avoid naked licensing may be indistinguishable from the control or assistance characteristically associated with a franchise. Compounding the difficulty in sorting franchise licenses from non-franchise licenses is misinformation circulating on the internet that suggests that the difference between franchising and licensing is the extent of control that a trademark owner retains over the licensee.
Listen as our authoritative panel of attorneys examines the differences between trademark licenses and franchises and provides best practices for structuring licenses to avoid inadvertently creating a franchise. The panel will also discuss best practices for complying with franchise laws if an inadvertent franchise has been established and minimizing vicarious liability based on the activities of licensees.
Outline
- Differences between trademark licenses and franchises
- Best practices for structuring the trademark licenses
- Avoid creating a franchise agreement
- Avoid naked licenses
- Strategies for complying with franchise laws if an inadvertent franchise has been established
Benefits
The panel will review these and other key issues:
- How do trademark licenses differ from franchise arrangements?
- How do accidental franchise claims typically arise?
- How do franchise laws regulate licensing arrangements?
- What are the liability risks of violating franchise laws?
- What best practices can counsel employ to avoid accidentally creating a franchise agreement?
- What does franchise law compliance entail?
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