Item 13: Trademarks
Consistent with the UFOC Guidelines, Item 13 of the amended Rule requires franchisors to disclose whether each of its principal trademarks is registered with the United States Patent and Trademark Office (“PTO”), as well as application, renewal, and other related information. If not, Item 13 mandates the following prescribed statement:
We do not have a federal registration for our principal trademark. Therefore, our trademark does not have as many legal benefits and rights as a federally registered trademark. If our right to use the trademark is challenged, you may have to change to an alternative trademark, which may increase your expenses.
Item 13 also calls for disclosure of other information, including:
- the existence of any pending litigation, settlements, agreements, or superior rights that may limit a franchisee’s use of the trademark; and
- any contractual obligation of the franchisor to protect a franchisee’s right to use the principal trademarks, and to protect the franchisee against claims of infringement or unfair competition.
Item 13 mandates these disclosures because the existence of pending litigation, settlement restrictions, or other potential limitations on the use of the trademark is highly material information. These are all factors on which the value of the trademark to a prospective franchisee may depend. Any one of them ultimately could have a major impact on a franchisee’s ability to continue operating the franchise.
Item 13 permits a franchisor to include an attorney’s opinion regarding the merits of any litigation or of a PTO or similar action if the attorney issuing the opinion consents to its use. The text of the Item 13 disclosures may include a summary of the opinion if the full opinion is attached to Item 22 and the attorney issuing the opinion consents to the use of the summary.
This article is part of a series of articles on starting a franchise in Minnesota.
CREDIT: The content of this post has been copied or adopted from the Federal Trade Commission’s Franchise Rule Compliance Guide.