Trademark Law - Trade Dress and Former Fast Food Buildings May Pose a Problem

As a former franchisor, I am always interested when I hear franchises or the industry talked about in the news. It seems to me that so many people have an incorrect view of what franchising is, but that doesn’t really surprise me. And I suppose few would have the perspective that I do having founded a franchise company, built it up in 23 states, and later retired after selling the operation.

In any case, one of the most valuable things that a franchise system has is its brand, its trademarks, and its trade dress. There is intrinsic value in all of that blue sky, and the power of a brand is quite real. In fact it is so real that old franchise locations for fast food restaurants, where the building is a certain style that went along with the franchise still drives in traffic even when the names are changed, and the building is painted a different color.

There was a very interesting article recently in Florida Today titled “What’s Old is New Again for Former Franchise Sites - Location Recognition Brings Back Customers,” by Patrick Peterson which was published on May 14, 2011. The article states ” When franchise restaurants go out of business, the vacated buildings are often recycled, as it were, and re-opened. New owners may add different color schemes and facades, but the structure of the old business - sometimes including iconic elements too big to change, like the roofline - often remains.”

However, there are other real issues to all this that must be considered also. As a franchisor, I would never wish for one of our buildings, or delivery vehicles to be sold to a third-party with a different name, logo on those items. Indeed it would violate our brand, trademarks, and it would absolutely be a violation of the trade dress our company has built up over the years. Any good attorney in the trademark law arena would see my point, and since there would be damages to the brand, there is a legal liability issue here with the new buyer.

Does that mean that a McDonald’s, Wendy’s hamburger, Burger King, Taco Bell, or Pizza Hut building would have to be modified on the outside so it didn’t look like the shell of what it used to be? Yes, theoretically it should, and there are court cases which could make the new buyer of that building change it. Especially if there is another franchisee not far from that location, and the franchisor is worried about confusion with its brand name. Indeed I hope you will please consider all this think on it.