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I would like to see a sample trademark license agreement that avoids being a franchise (in MI)

Troy, MI |

I would like to see a sample trademark (servicemark) license agreement, more particularly a service mark license agreement, that avoids being a franchise (MI &/or federal). I want to charge for people to use my service mark over the amount of $3000. Is there any sample agreements you would suggest me to look at.

Attorney Answers 9

  1. Though sample licensing agreements may be a good start, you should really consider having a lawyer prepare a license agreement that protects your service mark. In my experience, I find the do-it-yourselves contracts/agreements are vague and do not always protect my clients. Having an Licensing Agreement, prepared by an attorney, that fits your business model will protect you and your service mark. Westlaw and LexisNexis have some sample agreements but they are paid services. I would suggest contacting a lawyer who handles trademarks and licensing agreements to discuss the details. In general, the initial consultation is free, at which point you can decide how you would like to proceed forward with licensing your service mark.

  2. Legal services is a lot more than forms. An attorney who interviews you will investigate what control you will have over the business operations and quality of the licensees. Too much control and you may risk being characterized as a franchise. Too little and you are jeopardizing your service mark by failing to control the quality of the service associated with the mark.

    This is not a do it yourself project. Further, lawyers spend years creating and then refining their own forms. To then give away forms is very unlikely.

    The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.

  3. You probably know the saying that a person who represents himself has a fool for a client. Agreements which accomplish specific goals are drafted by attorneys knowing of State and Federal laws. You need to confer with an Intellectual Property attorney.

    My comments have been made without discussion. An attorney client relationship has not been established. There may be conflicts which prohibit my providing you with specific legal guidance. Any contact with you beyond these few general words will start with a disclosure of opposing parties so that a conflict check can be made. You should discuss with an attorney.

  4. I agree with all the smart lawyers here. You need a lawyer. I am curious regarding your statements on franchises - plenty of trademarks and servicemarks are licensed that aren't part of a franchise.

    THIS SITE IS ATTORNEY ADVERTISING AND PRIOR RESULTS DO NOT GUARANTEE A SIMILIAR OUTCOME. My Avvo site contains general information only, is not legal advice and does not create an attorney-client relationship.

  5. As a franchise attorney , who has actually walked the walk, owning and operating a very successful franchise, and a court-accepted, testifying franchise expert, I agree with my colleagues.

    If you are charging $3k, letting other use your service mark, and providing assistance (OR exercising controls), you're usually in the franchise box.

    There are a plethora of illegal franchise, disguised as "licenses," cases these days. I represented a licensee who bought 2 of these, paying the licensor a total of $40k. After filing a Complaint for offer and sale of an illegal franchise, the licensor quickly settled for about $600k. You do the math.

    Good luck (and you get what you pay for)

    Kevin B. Murphy, B.S., M.B.A., J.D.
    Franchise Attorney & Franchise Expert
    Director of Operations - Mr. Franchise

  6. As my colleagues have all advised, this is really a case where you need to consult an attorney with substantial franchise, intellectual property and securities experience. Whether you can have a license without being a franchise will depend on the specific facts of your proposal and both federal laws and state laws in both your state and the state where the licensee is located. As Mr. Murphy pointed out, there are many "accidental" franchises termed licenses, and this "accident" can result in having to pay significant losses.

    You might also consider that if your proposed venture is a franchise, that is not necessarily a bad thing. By complying with the franchise laws, you avoid the argument that the proposed venture runs afoul of the securities laws - which is another substantial risk that needs to be evaluated if you are doing a "license."

    This response is not intended as legal advice or to establish an attorney-client relationship. It is for informational purposes only.

  7. Dear Troy MI, your business must not fall under the definition of a franchise, which is a 3 prong test
    Your business must NOT satisfy all 3 prongs of the definition of Franchise in order to avoid violating franchise laws. It can satisfy 1 or 2 prongs

    I have given a link below to the Michigan definition (It is virtually the same in all the states with franchise laws).

    Also, below I have a link to an article that discusses the differences between franchises, licenses and distribution agreements as well as a like to separate blogs I wrote on the subjects .

    As for the licensing agreement, Once you are clear you are not a franchise business, you can write the license agreement to accomplish your goals of terms, conditions and default ramifications; basic contract terms. If however you make conditions that bring you into the 3 prong definition you become a franchise.

    There are no sample agreements; license agreements are customized, and in the case of your situation it is critical that customization be accomplished by an experienced attorney who knows franchise laws to help you draft the agreement to protect you from the ramifications of becoming an accidental franchise. I too, like my colleague have had clients with distribution agreements that have come to me for assistance and they are in fact franchises, which then gives my clients huge damage rights against the other party for failure to comply with the franchise disclosure laws, etc.

    If your situation is strictly licensing the name with no franchise-like conditions or obligations, then the terms of such an agreement shouldn't be big legal expense, well less that your first license fee will be. Smarter to make that small investment to assure your future. And you can then modify your business model to keep it out of the definition if it would be. I am sure any of the franchise attorneys here on AVVO who have answered this question can assist you.

    The foregoing is for informational purposes only and may not be relied on as attorney-client advice.

  8. Your question is a loaded one. There is plenty of litigation currently in the "I wan to to avoid being a franchise" arena. A trademark, an MO, and $500, and PRESTO! you are a franchise under the FTC Rules. Do yourself a favor, and contact a professional IP/Franchise (preferably both) attorney. A large part of my practice is going after those entrepreneurs who believe they can skirt the line.

    Thanks and good luck!

    Mario L. Herman
    The Franchisee's Lawyer

  9. I agree with Attorney Murphy. You are likely taking a dangerous route here, likely seeking to avoid being a franchisor when you really are one. It would be irresponsible of us to provide you some form, as you are likely to end up defending a suit by some disenchanted licensee proving you are an illegal franchisor. Consult a franchise expert. Attorney Murphy would be a good one. Find out if you are really a franchisor. Don't try to fraudulently claim you are something you are not using some phoney license you whip up yourself without legal representation. The course you are on right now seems extremely perilous.

    I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.