Launch error? Documenting Your Efforts to Launch Your Franchise System Could Save Your Trademark Registration – Franchising

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A recent decision by the Canadian Registrar of Trademarks recognized that the path to launching a franchise system can be bumpy and pointed out that in order to preserve a franchisor’s trademark rights, it is essential to document system launch efforts. Specifically, the Registrar maintained a franchisor’s trademark despite the lack of evidence that the related services had actually been offered to the Canadian public. While unique circumstances helped the Registrar make this decision, the case serves as a reminder of how important it is to document the time and effort it takes to launch a franchise system, as it just might save the franchisor’s brand. .

In Life Maid Right – 2799232 Ontario Inc. and Maid Right, LLC (2022 COMC 104),1 Maid Right, LLC (Maid Right) purchased a franchise system in 2018 which included trademark registration for MAID RIGHT for various cleaning services. In December 2020, summary cancellation proceedings were brought against the MAID RIGHT trademark registration, which required Maid Right to provide evidence of use of the mark in Canada at some point during the trademark registration period. previous three years. If Maid Right could not provide proof of use, the registration of the MAID RIGHT trademark would be canceled for non-use unless Maid Right could establish that there were “special circumstances” justifying such non-use.

In the end, Maid Right succeeded in establishing the “special circumstances” required to save its trademark registration. Whether the particular circumstances excusing non-use had been established required consideration of three criteria: (i) the length of time Maid Right had not used the mark; (ii) if the reasons for non-use were beyond Maid Right’s control; and (iii) whether Maid Right had any serious intention of resuming use of it in the near future.

Maid Right satisfied these three criteria by providing the following evidence:

(i) it could only recruit pre-qualified individuals or companies, which made it more difficult for Maid Right to find franchisees who could provide the cleaning services;

(ii) that Maid Right’s onboarding process involved an initial training program with 40 hours of initial training, 80 hours of online training, 36 hours of classroom training and 4 hours of on-the-job training, meaning that it was a very complex process;

(iii) that Maid Right had made significant efforts to produce a Canadian disclosure document for use in marketing to potential Canadian franchisees, and that franchisees would need to obtain legal advice before entering into a franchise agreement, which would further slow down the process;

(iv) that franchisees had to make a significant investment to start operating the franchise, thereby further reducing the potential pool of candidates to offer the services; and

(v) that Maid Right had engaged in recruitment efforts throughout 2019 and 2020 and had provided informational materials to several Canadians, resulting in the registration of a single franchisee (which ultimately moved back, so he never offered cleaning services).

Collectively, this evidence allowed the Registrar to conclude that Maid Right had engaged in a good faith effort to launch the franchise and provide the services during the relevant period, and that the delays were ultimately beyond Maid’s control. Right.

While this decision may prove to be an outlier in Canadian case law, there are some general points that are useful to remember.

  • As stated at the outset, if you are a franchisor, carefully document your efforts to launch your franchise system and to offer goods or services in Canada – this may ultimately preserve your trademark rights. This is particularly important given that currently it takes at least three years for Canadian trademark applications to be considered, so the majority of marks take at least 4 years to register. . Therefore, if you have a registration, you want to do everything in your power to avoid losing it since trademarks are a pillar of a healthy franchise system.
  • Make sure your trademark application uses broad language and includes goods or services that you believe will get to market quickly. For example, if the MAID RIGHT trademark registration included a service description such as “providing information to franchisees in the area of ​​cleaning services via a website”, having a .ca website displaying the MAID RIGHT trademark with a informative content directed at potential Canadian franchisees would have more likely signified use of the mark. Consequently, at least part of the services of the MAID RIGHT mark would not have been so threatened at the time of the opening of the proceedings for interim measures for annulment.

That being said, the trademark attorney’s mantra is “if you don’t use it, you lose it.” So, while there are exceptions like the one mentioned above, continued use of the Trademark is by far the best way to securely create and maintain your Trademark rights in Canada and allow your franchise business to grow on solid foundations.

Footnote

1 Life Maid Right – 2799232 Ontario Inc. and Maid Right, LLC, 2022 COMC 104 (CanLII), (https://canlii.ca/t/jpnfb)

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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