Do franchise branding rights go with the sale of a single retail location?

A seller who runs one franchised store can sell the fixtures, inventory and customer relationships, but the brand on the sign is a different kind of asset. Under Ontario’s and British Columbia’s franchise Acts, one form of franchise involves the franchisor granting the right to sell goods or services substantially associated with a trade-mark or trade name of the franchisor or its associate, alongside payment and control or assistance elements. Check what your agreement lets you pass on before treating the sale of one location as a deal between you and the buyer alone.

What your agreement actually grants

Read the grant clause for what it covers. Does it name one address or a territory, and does it say the right is personal to you or to your company? Look for who may use the marks, and for how and when. A right tied to one location may need the franchisor’s involvement the moment the location changes hands, whatever the purchase agreement says.

How a buyer ends up with the brand

The franchisor may approve an assignment of your agreement, it may grant the buyer a new franchise agreement, or it may do neither. Ask the franchisor which route it uses and whether the buyer receives your remaining term or a fresh one. Our answer on what to read before signing a franchise transfer agreement lists the documents involved.

Check who owns the marks

The Canadian Intellectual Property Office says a trademark owner can sell or transfer its rights through an assignment, and it keeps a searchable Canadian Trademarks Database. Search the marks on your signage. The registered owner may be the franchisor or a related company, and that is the party whose grant the buyer needs. If you hold only a licence to use the mark, check whether your agreement lets you pass it on at all.

If the franchisor does not approve the buyer

Check what your agreement requires when you stop using the brand, such as removing signage and branded materials, and whether a non-compete limits what the buyer can do under another name. Our answer on whether a non-compete survives a franchise transfer covers that second question.