When a business owner is approached about licensing or franchising their brand, the conversation often starts with excitement about expansion. But according to trademark attorney Joey Vitale, founder of Indie Law, those talks can stall quickly when the other side asks a fundamental question: Do you actually own the trademark rights to your brand?
"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 in exchange for agreed terms, while franchising goes further by allowing another operator to run a business under the brand and its system. In both scenarios, the brand itself is central to the deal, and a federal trademark registration helps establish exclusive legal rights to use the name for the goods or services covered by the registration. Without those rights secured, a business may lack the protection that licensing partners, franchisees, investors, and their attorneys expect to see.
In the United States, franchisors are generally required to provide prospective franchisees with a Franchise Disclosure Document (FDD), which includes a section dedicated to trademarks. That section asks the franchisor to identify the brand's main trademarks, state whether they are federally registered, and disclose any known conflicts, such as another business claiming earlier rights to the name. Federal registration isn't required to sell a franchise, but a brand without one must disclose that fact and the added risks, which can give prospective franchisees and their attorneys pause. Licensing deals don't follow the same disclosure format, but licensing partners, investors, and their attorneys commonly request proof of ownership before signing.
Without that proof, the deal may slow down while the issue is sorted out. Terms may need to change. In some cases, the opportunity may disappear altogether.
There is also a bigger risk: a trademark search during due diligence, the legal and business review that happens before a deal is finalized, could uncover someone else 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."
Attorneys recommend starting the trademark process before serious deal conversations begin. Doing so allows time to search for potential conflicts, understand existing rights, and pursue federal registration before another party is waiting on proof of ownership. Indie Law focuses exclusively on trademarks and 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."
For business owners, the takeaway is clear: trademark protection is not just a legal formality. It is a prerequisite for growth. Without it, licensing and franchising deals can unravel, costing time, money, and opportunities. As more businesses look to scale, securing trademark rights early can mean the difference between a successful expansion and a stalled negotiation.
Additional information about trademark protection is available at www.indielaw.com. For a deeper look at the role of trademarks in franchising, see this article.
