An Insight into Franchise Agreements & Trademark Licensing in the UAE

Trademark registration in the UAE gives the right holders a golden chance to bolster the presence of their successful brands in the form of a franchise. With the help of a franchise agreement, the brands permit other parties to produce goods or provide services under their registered trademarks. Trademark license agreements are a major requirement that facilitates various business activities in the UAE including the franchise agreements.

In such business agreements, the owners of the trademarks need to be careful in dealing with the rights associated with the use of the trademarks. In franchise agreements, the trademark owner licenses the franchisee the right to use his trademarks. As per the UAE Trademarks Law, the proprietor of a trademark can license one or more persons to use the trademark by signing a written and notarized contract. The trademark can be licensed for all or some of the products or services under which the trademark has been registered in the UAE.

Franchise Agreements and Trademark Licensing in the UAE

In the UAE, the trademark owner has the right to allow an exclusive or non-exclusive license to the franchisee in the same geographical area. If a trademark owner grants an exclusive license say in the UAE, it means that only a specific licensee has the right to use the registered trademark in the UAE only. In such a case, the trademark owner cannot grant the license to any other parties for the same goods and services in the UAE however the trademark owner can grant the license to another person outside of the UAE say in Saudi Arabia or Bahrain etc. However, if the owner of the registered trademark is granting a non-exclusive license in the same geographical area say in the UAE, then one or more parties get the right to use the mark for the same goods and services in the UAE.

Also read: The Significance of Geographical Indications to Trademark Industry

Granting Rights of the Same Trademark to Different Parties for Different Goods

Another important provision is that the trademark owner can grant the license to different franchisees to use the same trademark in different goods and services. In the UAE, it is possible to register the same trademark in different classes (NICE Classification) of goods and services. For example, a trademark can be registered Class 14 under the heading ‘jewellery’. Apart from jewellery, the trademark comes under the category of ‘watches’ mentioned in Class 14. A trademark owner can grant the license to one franchise to use the trademark in the jewellery category and he can license other parties to use the same trademark in ‘watches’ category. However, the trademark owner should define the scope of the use of trademarks in each of the cases.

Rights of Trademark Owner in Franchise Agreements

While signing the franchise agreement, the licensees must be careful about the rights of the trademark owner over his registered trademarks. There is a provision in the Law that states that “… the trademark owner may use [the trademark] by himself unless agreed otherwise”.  The licensees must ensure that the rights of the trademark owner are not open to interpretations. The agreement should contain the scope and limitations of the rights of the trademark owner. Since setting out such clauses in the franchise agreement is critical for the smooth operations of the business, it is better to consult the best trademark agents in Dubai, UAE who can help with preparing the agreements properly.

Recordal of Trademark License in the Registry

While granting a trademark license to a franchise, it is mandatory to ensure the recordal of the trademark license the trademark Register. The license will have an effect against the third parties only if it is recorded in the UAE trademark Register.

The recordal of the trademark license in the trademark register is beneficial for the trademark licensee as well. A trademark owner has the right to apply for cancelling the registration of his trademark form the Register. However, if the owner has granted the license to another party by recording the license in the Register, then the written consent of the licensee is mandatory for the cancellation. If the recordal of the trademark license is not performed, then the licensee cannot avail the benefit of this provision. The recordal of the license in the trademark register confirms the legal status of the licensee.

This is an important provision in the law that franchisees need to consider while signing a franchise agreement. Since it is a crucial process in franchise agreements, the expert assistance of highly qualified trademark agents in the UAE would come in handy in such situations.

Can a Trademark Licensee Take Legal Action against Infringers?

It is common knowledge that the trademark registration gives the trademark owner the power to take legal action against infringers in the UAE. However, one may ask the question that only the owner of the registered trademark has the power to move against the infringers? Or is it possible for a trademark licensee to take legal action against the trademark infringers?

The answer to this question points the finger to one of the major challenges in the trademark franchise agreements. In the UAE, only the trademark owner has the power to enforce the registered trademarks to curb infringements. However, the licensee has the right to claim for damages he suffered as a result of the trademark infringement.

Seek Help From Trademark Agents in the UAE

The franchise agreement is an effective method by which the brands can enhance their presence in the market. By giving consent to other parties to use their registered trademarks, the brand owners get the opportunity to enhance the value of the trademark and boost the reach of the brand. However, several legal considerations govern the process of franchise agreements. The brand owners and the franchisees must know about the legal aspects of the trademark licensing before signing a franchise agreement. The owner of the registered trademark and the licensee should have clarity about the scope and limitations of their rights over the registered trademarks. Only a full-service intellectual property firm like Jitendra Intellectual Property (JIP) could offer expert assistance in such a case.

JIP’s highly qualified trademark agents could help with trademark licensing or the recordal of trademark licenses in the trademark Register. JIP is the most trusted name in Dubai, UAE when it comes to intellectual property services like trademark registration and protection of trademarks form infringement. JIP helps the brands conduct their business in the peace of mind by ensuring their trademarks remain protected across the GCC