By Keith L. Gross, Esq. · Gross Law Group, P.A. · Last reviewed October 23, 2026
Key takeaways
- Under the FTC Franchise Rule, a business relationship is a franchise in part because the franchisee operates under the franchisor's trademark (16 CFR § 436.1(h)). The brand is central to what is being sold.
- Item 13 of the FDD must disclose each principal trademark, its registration status, maintenance filings, pending proceedings, and limits on the franchisor's rights (16 CFR § 436.5(m)).
- Licensing a mark to franchisees depends on the owner controlling the nature and quality of the goods or services (15 U.S.C. § 1055).
- Federal registrations require maintenance filings between the fifth and sixth years and every ten years (15 U.S.C. § 1058).
- A former franchisee's continued use of the marks can support a federal infringement claim (15 U.S.C. § 1114).
Who this article is for
This article is for business owners preparing to franchise, for established franchisors reviewing their brand protection, and for prospective franchisees evaluating whether the brand they are buying into is protected. For the mechanics of the federal application process, see our trademark registration services.
Why the trademark is the franchise
The FTC Franchise Rule defines a franchise as a continuing commercial relationship in which the franchisee obtains the right to operate a business identified or associated with the franchisor's trademark, the franchisor exerts or has authority to exert significant control or provides significant assistance, and the franchisee makes a required payment (16 CFR § 436.1(h)). Without a protectable brand, the system has little to license, and every franchisee's investment rests on the franchisor's rights in the marks.
Before franchising: clearance and registration
Before a business offers franchises, it should know whether its name and logo can be protected nationally. A clearance search looks for earlier users of similar marks, including unregistered local users who may have rights in their own markets. Finding a conflict after units have opened can force a rebrand across the system.
The FTC Rule does not require a federal registration, but it requires the FDD to say whether each principal trademark is registered with the United States Patent and Trademark Office. If a principal trademark is not registered on the Principal Register, Item 13 must include this statement: "We do not have a federal registration for our principal trademark. Therefore, our trademark does not have 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." (16 CFR § 436.5(m)(4)). Prospective franchisees read that statement, and it can affect how a new system is perceived.
Florida also offers state trademark registration under chapter 495 (Fla. Stat. § 495.031). A state registration can be useful, but it does not provide the nationwide rights of a federal registration, which matters for a system that plans to grow beyond Florida.
What Item 13 requires franchisors to disclose
Item 13 of the FDD (16 CFR § 436.5(m)) requires, among other things:
- Each principal trademark licensed to the franchisee
- For each registered principal trademark, the registration date and number, whether all required affidavits have been filed, whether the registration has been renewed, and whether it is on the Principal or Supplemental Register
- For unregistered marks, any pending applications, including intent-to-use applications
- Material determinations of the USPTO, the Trademark Trial and Appeal Board, any state trademark administrator, or any court, and pending infringement, opposition, or cancellation proceedings
- Pending material litigation about the franchisor's use or ownership of a trademark
- Currently effective agreements that significantly limit the franchisor's right to use or license the marks
- Whether the franchisor must protect the franchisee's right to use the marks, who controls trademark proceedings, and whether the franchisor will defend or indemnify the franchisee
Because Item 13 is updated with the rest of the FDD, a new challenge to a principal mark can be a material change that requires a quarterly revision. See our article on FDD annual updates and amendments.
Who owns the marks
Many franchisors hold their trademarks in a separate affiliate that licenses them to the franchisor, which then sublicenses them to franchisees. That structure can protect the marks from the franchisor's operating liabilities, but it has to be documented. Item 13 requires disclosure of any agreement that significantly limits the franchisor's right to use or license the marks in a manner material to the franchise, including its duration, the parties, and when it can be canceled or modified (16 CFR § 436.5(m)(7)). A license that the affiliate can terminate on short notice is a risk franchisees should understand.
Quality control: why brand standards protect the mark
Federal law allows a trademark to be used by "related companies" without harming the owner's rights. Use by a related company inures to the benefit of the registrant, and when first use is controlled by the owner with respect to the nature and quality of the goods or services, that use benefits the owner (15 U.S.C. § 1055). The flip side is abandonment: a mark is abandoned when any course of conduct of the owner, including acts of omission, causes the mark to lose its significance as a mark (15 U.S.C. § 1127). Licensing a brand without meaningful quality control is sometimes called "naked licensing."
This is one reason franchise agreements include operations manuals, approved suppliers, inspections, and brand standards. Franchisors have to balance enough control to protect the mark against the business and legal costs of controlling too much.
Keeping registrations alive
A federal registration lasts ten years, but it is canceled unless the owner files a declaration of use within the year before the sixth anniversary of registration and within the year before each ten-year anniversary, with a six-month grace period (15 U.S.C. § 1058), and renews the registration every ten years (15 U.S.C. § 1059). After five years of continuous use following registration, the owner may also be able to file for incontestable status (15 U.S.C. § 1065). Item 13 asks whether these affidavits have been filed and whether registrations have been renewed, so a missed deadline shows up in the FDD. See also the USPTO's guidance on maintaining a registration.
Enforcing the brand inside the system
Franchise agreements usually require franchisees to report confusingly similar uses, give the franchisor control over enforcement actions, and require franchisees to adopt substitute or modified marks if the franchisor changes them. These provisions are disclosed in Item 13 and should be read together with the agreement's indemnity terms. For enforcement against outside infringers, see our article on protecting a trademark from infringement and our Florida trademark infringement practice.
After termination: holdover use of the marks
When a franchise ends, the agreement typically requires the former franchisee to stop using the marks, remove signage and trade dress, transfer phone numbers and online listings, and comply with any post-term covenants. Continued use of a registered mark without consent in a way likely to cause confusion can support a federal infringement claim (15 U.S.C. § 1114), in addition to claims under the franchise agreement. Post-term non-competes are governed in Florida by Fla. Stat. § 542.335; see our article on franchise non-compete clauses and our article on exiting a franchise agreement.
Trademark questions for prospective franchisees
A franchise buyer is paying for the right to use a brand. Questions worth raising with counsel during FDD review include:
- Are the principal marks registered on the Principal Register, and are the maintenance filings current?
- Are there pending oppositions, cancellations, or infringement cases involving the marks?
- Does the franchisor own the marks, or license them from an affiliate or a third party, and on what terms?
- Must the franchisor defend your use of the marks and indemnify you if a claim is made?
- Who pays if the franchisor changes the marks and requires new signage or materials?
How Gross Law Group helps
Gross Law Group's franchise and trademark practice helps franchisors clear and register their marks, structure ownership and licensing, prepare Item 13, and enforce their brand, and helps franchisees evaluate the trademark disclosures in an FDD. Learn more about our franchise law practice and trademark registration services.
Frequently asked questions
Does a franchisor need a federal trademark registration to sell franchises?
The FTC Franchise Rule does not require a registration, but Item 13 must disclose whether each principal trademark is registered. If a principal trademark is not on the Principal Register, the FDD must include a prescribed warning that the trademark does not have many of the legal benefits and rights of a federally registered trademark (16 CFR § 436.5(m)(4)).
Who should own the trademark, the franchisor or an affiliate?
Either can work. Many systems hold the marks in an affiliate that licenses them to the franchisor. Item 13 must disclose any currently effective agreements that significantly limit the franchisor's right to use or license the marks in a manner material to the franchise (16 CFR § 436.5(m)(7)).
Why does a franchisor have to control how franchisees use the brand?
Federal trademark law allows use by related companies to benefit the trademark owner when the owner controls the nature and quality of the goods or services (15 U.S.C. §§ 1055, 1127). A course of conduct that causes a mark to lose its significance as a mark can amount to abandonment under 15 U.S.C. § 1127.
What happens if a former franchisee keeps using the brand?
Franchise agreements typically require a terminated franchisee to stop using the marks and de-identify the location. Continued use of a registered mark without consent in a way likely to cause confusion can support a federal infringement claim under 15 U.S.C. § 1114, along with contract claims under the franchise agreement.
What trademark questions should a franchise buyer ask?
Review Item 13 for registration status, pending proceedings, and agreements limiting the franchisor's rights, and the franchise agreement for whether the franchisor must defend your use of the marks and what happens if the marks change. A franchise attorney can explain what the answers mean for your investment.
About the author
Keith L. Gross, Esq. is the founding attorney of Gross Law Group, P.A. His practice focuses on franchise law and trademarks for franchisors and franchisees. Before law school he built several businesses. He is admitted to practice in Florida.
Disclaimer: This article is general information about the law as of the review date above. It is not legal advice and does not create an attorney-client relationship. The right answer depends on your specific facts and documents. Consult a licensed attorney before franchising a brand, licensing a trademark, or signing a franchise agreement. See our full disclaimer.