Gavel to Gavel: Control Freaks By Rachel Blue


Article originally published in The Journal Record - April 14, 2011.

Sharing a business idea can mean increasing its value for its owner, building the brand and generating revenue in more than one location. Let's say you're doing great in Tulsa with your computer repair business called House Calls. You think the idea would work almost anywhere, and mention it to a buddy at your high school reunion. Turns out he's been laid off and is looking for a business opportunity. How do you handle letting your buddy open another House Calls location in Enid?

You had the good sense to get a federal registration for your service mark, House Calls. The owner of a trademark (or service mark) can license others to use the mark, but federal law requires a trademark owner to exercise control over the licensee's use of the trademark. In short, if you let your buddy open a House Calls location, you have to make sure he does things right. But how far do you go in controlling his location? Not far enough and your buddy is showing up in a van with House Calls and telling clients he fixes only Apple computers, which damages your reputation (and your trademark rights). If you go too far, you could find yourself in an accidental franchise.

Utter the word "franchise" and most people conjure up the golden arches or the green logo that acts like a siren's call to the caffeine-deprived.

Franchises have the following three basic elements....

Article authored by McAfee & Taft Attorney: Rachel Blue.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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