Ask A Legal Expert: How Do Franchisees Help Protect The Use And Distinctiveness Of The Franchise Brand?

As published in the July/August 2026 issue of Franchise Canada Franchise Canada magazine.

Q: How do franchisees help protect the use and distinctiveness of the franchise brand?

A: In addition to getting access to the secret sauce, franchisees pay franchisors for the use of their brand and the goodwill acquired in the franchisor’s trademarks. These valuable trademark rights can be lost. In a franchise system, trademark licenses, brand guidelines, and operating standards are needed to prove use and preserve distinctiveness of trademarks to maintain trademark rights.

“Use” of a trademark and loss of trademark rights through non-use

“Unlike other forms of intellectual property, use of a trademark is essential, and is fundamental to trademark rights” – per Mactaish J.A. in Miller Thomson LLP v. Hilton Worldwide Holding LLP, 2020 FCA 134 (CanLII), 2020 FCA 134 at para 6

For a trademark to be in “use” it must be displayed in the performance or advertising of services or marked on—or associated with—goods. 

If a registered trademark has not been used, it can be expunged or amended. If an unregistered trademark has not been used, then the trademark owner will be unable to establish any enforceable rights in the trademark.

Sometimes issues concerning non-use of a trademark result from a deviation between the trademark as registered and the trademarks as used. Trademark variants can happen as brands evolve or through sloppy brand management. 

The Federal Court of Appeal has held that a registration could be maintained “if the same dominant features are maintained and the differences are so unimportant as not to mislead an unaware purchaser” – per Macguigan J.A. Promafil Canada Ltée v. Munsingwear Inc. (1992), 1992 CanLII 12831 (FCA) The Federal Court of Appeal cautioned that “with every variation” the owner of the trademark is “playing with fire.” 

To avoid potential challenges, prudent franchisors provide brand guidelines to franchisees that require them to make consistent use of the franchisor’s trademarks. 

Distinctiveness and loss of distinctiveness

“Distinctiveness is of the very essence and is the cardinal requirement of a trade-mark” – per Binnie J. in Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22 (CanLII), 2006 SCC 22 at para 75 citing Western Clock Co. v. Oris Watch Co., 1931 CanLII 372 (CA EXC) (1931), 1931 CanLII 372 (DLR)

For a trademark to be “distinctive” it must be used to distinguish the goods and services of the trademark owner from the goods and services of others (see Trademarks Act, RSC 1985, supra, s 2). 

A registered or unregistered trademark can lose its distinctiveness. A registered trademark is susceptible to expungement from the trademark register, while an unregistered trademark is unenforceable.

Failing to prevent infringement: If a trademark is used concurrently by others, it no longer functions to identify a single source of the goods or services. It does not matter whether there are numerous other users or a single user. If the reputation of the other trademarks in Canada becomes substantial, significant, or sufficient, they can negate the distinctiveness of the franchisor’s trademarks. Ideally, all instances of infringement are reported to the franchisor and timely steps are taken to prevent infringement.

Trademark becomes generic: If a trademark becomes the generic name for a good or service, then the trademark stops functioning as a trademark. To oversimplify, trademarks should not be used as nouns or verbs to prevent them from becoming synonymous with goods or services. Examples of trademarks that have lost their registrations in some jurisdictions are thermos, band-aid, kleenex, and laundromat. Adherence to brand use guidelines helps prevent marks from becoming generic.

Poor licensing practices: A franchisor must have proper licenses in place with every entity that uses its trademarks. Licenses must provide the franchisor control over the character and quality of the goods and services provided in association with the franchisor’s trademarks. In the absence of a proper license, use of the same trademark by one or more franchisees leads to a loss of distinctiveness because the same trademark is being used by several different entities. Compliance with operating guidelines is important to maintain proper licensing. 

Conclusion

Trademark “use” and “distinctiveness” must be consistently maintained by franchisors and their franchisees by complying with brand guidelines, operating standards, and licenses. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.