Beyond the Binder: Item 13 – Trademarks
Understanding Item 13
Item 13 of the Franchise Disclosure Document (FDD) tells you about the trademarks you will use as a franchisee. Trademarks are a core part of a franchise system’s value; they are the brand names, logos, slogans, and other identifiers that connect customers to the business. This section explains what marks the franchisor owns, their legal status, and your rights (and limits) in using them.
You should expect to see:
The primary trademark(s) you’ll be authorized to use
Whether those marks are registered with the U.S. Patent and Trademark Office (USPTO)
Any pending trademark applications or renewals
Any challenges, disputes, or litigation involving the marks
Whether the franchisor has agreements that could restrict your use of the marks
What Must Be Disclosed
The FTC Rule requires franchisors to disclose:
Trademarks you’ll use: Including names, logos, and taglines.
Registration status: Whether each mark is registered, pending, or unregistered.
Ownership: Who owns the marks and whether they are licensed from someone else.
Material litigation: Lawsuits or disputes that could affect your right to use the marks.
Restrictions: Rules on how, when, and where you can use the marks, including online.
If the main trademark is not federally registered, or if the registration is under challenge, your right to use it could be less secure. That can affect everything from your marketing to your ability to sell your location.
Why It Matters
The franchisor’s brand is one of the main things you’re buying. If the trademarks are weak, unprotected, or tied up in litigation, you may find yourself paying royalties for a brand that is losing value, or could be taken away entirely.
A few scenarios to watch for:
Pending applications: If the main trademark is not yet registered, you’re taking a risk that it may never be.
Litigation over the mark: A loss in court could force a costly rebrand for every franchisee.
Third-party ownership: If the franchisor licenses the mark from another entity, your rights could disappear if that license ends.
Similar brand names: Competitors with confusingly similar marks can dilute your brand power.
Real Due Diligence Tips
Search the USPTO database: Look up the marks in the FDD to confirm registration status, serial numbers, and ownership.
Check for challenges: Review the Trademark Trial and Appeal Board (TTAB) for opposition or cancellation proceedings.
Ask about history: Has the brand ever been forced to change names or logos? Any past settlements?
Evaluate brand strength: Is the brand recognized nationally or regionally? Are there competing brands with similar names?
Get it in writing: If the franchisor promises new filings or trademark protection, make sure it is documented.
The Bottom Line
Trademarks are the legal backbone of a franchise brand. Item 13 tells you whether the name on the sign is truly protected and whether you’ll have secure, long-term rights to use it. A strong, registered mark can add value to your investment; a weak or disputed one can undermine it. Don’t just take the franchisor’s word for it. Verify, ask questions, and consider the risk of paying for a brand that might not stand the test of time.
The information in this post is provided for educational and informational purposes only and does not constitute legal advice. Franchise Reality Check™ is not a law firm and does not provide legal representation. Trademark status, registration, and ownership rights are subject to change, and interpretations of franchise agreement terms may vary. Always consult with a qualified franchise attorney before making any decision to purchase, operate, or invest in a franchise. Any opinions expressed are based on the information available as of the publication date and may not reflect subsequent developments.
