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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

Posted

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.

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Asker

Posted

Can you provide me with some free sample wording that might make it a license agreement over that of a franchise agreement?

John M. Burke

John M. Burke

Posted

As my colleague suggested below, you can find licensing agreements on-line. As I mentioned previously, Westlaw and LexisNexis has sample licensing agreements. However, a sample license agreement may not protect you and what you are trying to accomplish. In fact, recently I had a client show me a license agreement that did not protect them. They used a sample license agreement. I noticed you are from Troy, Michigan. Cooley Law School at Auburn Hills is not far from you. You may be able to obtain a sample licensing agreements at their library or use their Westlaw or LexisNexis account at the library for a nominal fee. As far as providing sample language here, I do not know the specifics of your business or your service mark. I am certainly happy to consult with you and prepare a license agreement that fits your needs but I would need to be retained to prepare a license agreement.

Neal Jonathan Blaher

Neal Jonathan Blaher

Posted

I appreciate the strong interest you show here in attempting to procure a form to meet your needs. Your earlier comments suggest perhaps some prior attorney experiences that may have been more costly to you than you believed were justifiable. Not all attorneys charge the same fees for the same services regardless of their experience and competence; and not all attorney services require the same fees. At the same time, however, "shopping" for professional services is not the same as shopping for tires --- different tire retailers, for the most part, sell the same name brands and have the same type of individual with limited training putting them on for you. But getting the best price for professional services, without also investigating and evaluating the quality of those services, can cost you a whole lot more in the long run if and when you have to fix a costly problem that bad legal advice/services created. Bottom line --- of course evaluate the cost of the legal services, and keep in mind that such services do not always have to be overly expensive. But don't lose sight of the lawyer's experience and competence, nor your own comfort level with, and confidence in, the attorney you use.

Neal Jonathan Blaher

Neal Jonathan Blaher

Posted

I left out perhaps the most important part: Attempting to handle a matter yourself that is best left to an attorney may end up being the highest ticket item of all.

Posted

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 avvo.com terms and conditions item 9, incorporated as if it was reprinted here.

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Asker

Posted

I understand Legal Services are more then just forms. BUT you did not even attempt to answer my question. I do not understand why you comment if you do not give any helpful information. I KNOW that getting a lawyer is the BEST option. BUT if you are going to comment at least have the courtesy by shedding some light on franchise vs license agreement or explaining how some wording in licensing agreements would be helpful. Do you get credit points with avvo or something? Well I am flagging your unhelpful response.

Michael Charles Doland

Michael Charles Doland

Posted

You are welcome to do as you see fit. I truly don't need points, and certainly don't answer questions to aggravate Avvo askers. Trademarks can be licensed, but a requirement is to control the quality of the product or service even after the licensing. If you are sure you only need a license, then doing an internet search on trademark license agreement template hundreds show up, including from Entrepreneur Magazine and Princeton University. If it is not a mark alone but a business model that you are transferring plus a trademark, that's a franchise. An internet search for franchise agreement template equally yields hundreds of forms. You cannot just say in a license agreement "this is not a franchise". That has no legal effect. It is the analysis of when a license becomes a franchise that it becomes complex When I advised a former multinational client with 450 stores in the US that all their license agreements (prepared by a prestigious Washington DC lawfirm) were instead unregistered franchises, they laughed. Until the first store sued for rescission based on the franchise laws. Your questions asks for forms. I explain that the form without the analysis is often of little value. I also gave you a practical heads-up about the likelihood of getting free forms. Sorry you were upset. Good luck in your venture.

Asker

Posted

Sorry for being so hard on you earlier. It's just frustrating for small business to comply with every tiny thing and still turn a margin.

Michael Charles Doland

Michael Charles Doland

Posted

No problem. Lawyers without a thick skin have a short career. I repeat, good luck in your venture. PS - If a Michigan attorney responds, that answer should have your priority. Out of state attorneys like myself respond on general legal principles which are applicable 90+ percent of the time, but each State can have special requirements, e.g. for franchising that differ from the FTC rules, that an out of state attorney would not know about.

Kevin Brendan Murphy

Kevin Brendan Murphy

Posted

My comments apply both at the federal and state (Mi) levels.

Posted

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.

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Posted

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.

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Kevin Brendan Murphy

Kevin Brendan Murphy

Posted

Please see my answer; it's very instructive.

Posted

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
FRANCHISE FOUNDATIONS APC

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Posted

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.

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Posted

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.

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Posted

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

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Kevin Brendan Murphy

Kevin Brendan Murphy

Posted

Know what? I'd also like to see sample trademark license agreement that avoids being a franchise, along the lines mentioned by the poster. I've never seen one !

Posted

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.

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Kevin Brendan Murphy

Kevin Brendan Murphy

Posted

Following up on Bruce's insightful answer, you want to see a sample trademark license agreement that avoids being a franchise along the lines you mentioned. Know what? So would I - never seen one.

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