When a business owner builds a recognizable brand, growth opportunities such as licensing or franchising often follow. However, according to trademark attorney Joey Vitale, founder of Indie Law, many of these deals stall because the business cannot prove it owns the trademark rights. "A lot of business owners don't see this problem when they're starting out," Vitale said. "It shows up when the business gets bigger. Someone wants to license the name, open another location, or invest, and suddenly they're asking a very important question: Do you actually own this brand?"
Licensing a brand means granting permission to use the name for agreed terms, while franchising allows another owner to operate under the brand and business system. In both cases, the brand is central to the deal. A federal trademark registration establishes exclusive legal rights to use a name for specific goods or services. Without it, a business may lack the protection that licensing partners, franchisees, investors, and their attorneys expect. This can transform a growth opportunity into a legal dispute.
Before a franchise deal proceeds, trademark ownership is scrutinized. In the United States, franchisors must provide a Franchise Disclosure Document (FDD), which includes a section on trademarks. This section requires the franchisor to identify main trademarks, state whether they are federally registered, and disclose any known conflicts. While federal registration is not mandatory to sell a franchise, a brand without it must disclose that fact and the associated risks, which can deter prospective franchisees and their attorneys. Licensing deals do not follow the same format, but partners and investors commonly request proof of ownership before signing. Without that proof, negotiations may slow, terms may change, or the deal may collapse entirely.
There is also the risk that a trademark search during due diligence could reveal another party with stronger rights to the same or a similar name. "That's a painful time to find out you have a trademark problem," Vitale said. "You might have a great opportunity sitting in front of you, but now everything has to stop while you figure out whether you actually own what you're trying to license. This is the kind of issue that's much easier to deal with before there's a term sheet and a deadline on the table."
To avoid such setbacks, attorneys recommend starting the trademark process before serious deal conversations begin. This allows time to search for conflicts, understand existing rights, and pursue federal registration before another party demands proof of ownership. Indie Law, which focuses exclusively on trademarks, has helped business owners protect their brands through more than 2,500 trademark filings, with a 99.7% success rate. "You can't build a bigger future for a brand you don't fully own," Vitale said. "Get the ownership piece right first. Then you can think about where the brand goes next."
Additional information about trademark protection is available at www.indielaw.com. For a deeper look at why brand protection is the backbone of every franchise, see this article: https://www.indielaw.com/blog/the-role-of-trademarks-in-franchising-why-brand-protection-is-the-backbone-of-every-franchise/.
