When a business has an established brand, it can attract franchise investors. However, it is important to ensure that its intellectual property rights are properly registered to avoid disputes over ownership, unauthorised use and other legal complications.
Many businesses use franchising as a way to expand their operations. The prospect of operating under a recognised brand, following a proven business model and entering new markets can attract investors willing to pay for the right to use an established commercial identity. This model is becoming increasingly important across the UAE and the wider Gulf Cooperation Council (GCC), particularly in sectors such as food, hospitality, retail, education, healthcare and professional services.
Trademark Ownership
A franchise is a commercial arrangement under which the franchisee receives the right to use a combination of intellectual property, business systems, processes, know-how and support developed by the franchisor.
The trademark identifies the business, distinguishes its products or services from those of competitors and carries the reputation associated with the original operation. Many franchise opportunities depend heavily on the recognition and goodwill attached to the brand.
There is an important distinction to understand. Having a valid trade licence, several successful outlets and distribution agreements does not necessarily mean that a company owns the trademark. The business may not have the registered trademark rights required to license its brand to another party.
Anyone looking to franchise a business should be prepared to demonstrate to prospective franchisees that they have the legal right to license the brand. Uncertainty over ownership can create difficulties and potentially undermine the entire commercial arrangement.
Trademarks and UAE Law
The UAE has an established statutory framework for trademark protection. Federal Decree-Law No. 36 of 2021 on Trademarks came into force on January 2, 2022, while Cabinet Resolution No. 57 of 2022 governs its implementation.
Broadly, distinctive signs may be registered as trademarks. These include names, words, letters, numbers, symbols, drawings, packaging, colours, three-dimensional marks, holograms, sounds and smells, subject to the applicable legal requirements.
This is particularly relevant to franchise businesses. A brand may be widely recognised not only through its name or logo but also through a distinctive way of presenting products, packaging designs or other identifying features. Such elements may require separate intellectual property protection.
Applications are submitted to the Ministry of Economy and Tourism and examined before acceptance. Once accepted, they are published, allowing third parties to raise objections. Under the published procedure, the objection period is 30 days following the last announcement.
A registered trademark is protected for ten years from the filing date and can be renewed for successive periods of ten years. Businesses should monitor renewal deadlines and maintain accurate ownership records to ensure that their rights remain protected.
Trademark applications should not be limited to a company's logo. Businesses need to establish who owns the mark, which elements require protection and the appropriate classes of goods and services for which registration is sought.
Why Registration in One Country is Not Enough
One of the common mistakes made by businesses planning regional expansion is assuming that trademark registration in their home country, or even in the UAE, automatically protects their brand throughout the GCC.
Trademark rights are territorial and generally apply in the jurisdiction in which they are registered. A business with a registered trademark in the UAE cannot assume that the same protection automatically extends to Saudi Arabia, Qatar, Bahrain, Kuwait or Oman.
Although the GCC has adopted a common Trademark Law to harmonise key principles relating to trademark protection, there is no single central registration system providing automatic protection across all six member states. Applications must still be made to the relevant national authorities.
Businesses seeking protection throughout the region should therefore consider filing applications in each country where they intend to operate or appoint franchise partners.
This distinction can have significant commercial consequences. A business may successfully register its trademark in Dubai and subsequently appoint a franchisee in Riyadh, only to discover that an earlier registration or application for the same or a similar mark exists in Saudi Arabia. Such a conflict can create difficulties after a franchise agreement has been signed and investments have already been made.
The Risk of Losing Control of Your Brand
Failure to register a trademark can expose a business to considerable risks. Another company may register an identical or confusingly similar mark in a market where the original owner has not secured adequate protection.
This can create a serious obstacle for an expanding franchise. A business may have spent years developing its brand and reputation, yet a third party holding enforceable local rights could challenge its ability to enter that market under the same name.
There may be circumstances in which an established reputation provides grounds to challenge a conflicting registration. UAE law, for example, recognises protection for qualifying well-known trademarks, including in certain cases involving different goods or services. However, businesses seeking to rely on this protection must establish that their mark meets the relevant legal requirements. Having a good reputation alone does not automatically guarantee protection.
Trademark disputes can also arise between franchise partners. A franchisee may have invested heavily in developing the local market and subsequently seek to retain the brand after the relationship ends. There may be attempts to register a similar name or continue operating under the original commercial identity.
Clear ownership arrangements, appropriate contractual provisions and proper registration can help prevent such disputes. As a general principle, trademarks should remain under the ownership of the franchisor or a designated intellectual property holding company rather than being registered in the franchisee's name without a carefully considered legal reason.
Trademarks and Franchise Agreements
Trademark protection and franchise agreements should work together. The agreement should clearly identify the intellectual property being licensed and define the extent of the franchisee's rights to use it.
Article 30 of the UAE Trademark Law provides that a trademark owner may grant one or more natural or legal persons a licence to use the registered trademark in relation to all or some of the goods and services for which it is protected. The licence cannot extend beyond the trademark's protection period.
Article 31 requires the licensing agreement to be in writing. Although registration of the licence is not compulsory under the law, the executive regulations provide a procedure for recording it, and the Ministry offers a specific licensing service. Having the licence properly documented and considering registration can provide greater clarity about the rights granted.
The agreement should specify whether the franchisee may use the trademark only at an approved outlet or across a wider territory. It should also identify the products and services covered, the duration of the licence, marketing requirements, quality-control standards, restrictions on sublicensing and the consequences of termination.
Quality control deserves particular attention. A franchise brand depends on consistency. If franchisees are allowed to use the trademark without following the franchisor's operating standards, the reputation associated with the mark may suffer. Article 33 of the UAE Trademark Law specifically recognises the importance of quality-control requirements in trademark licensing arrangements.
The agreement should also address what happens when the relationship ends. The franchisee should stop using the trademark, remove branding from its premises, discontinue branded marketing and return or destroy materials containing protected intellectual property, subject to applicable legal and contractual requirements.
Protecting Other Intellectual Property
A franchise business often relies on several forms of intellectual property. While trademarks protect distinctive brand identifiers, they do not automatically cover every aspect of the business.
Original marketing content, website material, photographs, training manuals and software may qualify for copyright protection. Recipes, production processes, pricing structures, databases and business methods may be protected as trade secrets or confidential information, provided the relevant legal requirements are met and reasonable steps are taken to maintain confidentiality.
The franchise agreement should identify the intellectual property owned by the franchisor before the relationship begins. It should also address improvements, adaptations, translations and digital assets developed by the franchisee during the term of the agreement.
Domain names and social media accounts can create additional complications. If a franchisee independently registers a local domain name or retains control of social media accounts using the franchisor's brand, disputes may arise when the agreement ends. Ownership and administrative control of these assets should be settled before the business begins operating.
For businesses expanding across several jurisdictions, a coordinated intellectual property strategy is preferable to treating each asset as a separate legal matter.
Deciding Who Owns the Trademark
Businesses should also consider which legal entity will own the trademark. It may be registered in the name of the operating company, its parent company or a separate intellectual property holding company.
The choice can affect licensing, taxation, financing, asset protection and future restructuring. An intellectual property holding company, for example, may allow a business group to retain ownership of its brand while licensing it to operating companies and franchise partners in different countries.
However, such an arrangement requires genuine commercial substance, proper documentation and compliance with relevant tax and regulatory requirements. Transferring a trademark to another company within the group without adequately documenting the transaction can create uncertainty over ownership and complicate subsequent licensing arrangements.
Where several shareholders or family members are involved, businesses should also establish who has authority to license, transfer or pledge the trademark. These questions become particularly important when seeking external investment or preparing to sell the franchise business.
Preparing for Trademark Protection
Businesses planning to franchise in the UAE and GCC should address trademark protection before entering serious negotiations with prospective partners.
The first step is to conduct a comprehensive search for identical or similar trademarks in the intended markets. Existing registrations and pending applications should be examined in the relevant goods and services classes. The availability of a brand name in one country does not guarantee that it can be registered in another.
Once ownership has been established, applications should be prepared for the principal brand name, logo and other commercially important elements. The appropriate trademark classes must be selected to reflect the business's existing activities and realistic expansion plans. A restaurant brand, for example, may require protection covering more than the sale of food, depending on its business model and proposed activities.
Businesses should also consider international registration through the Madrid System. The UAE, Bahrain, Oman, Qatar and Saudi Arabia, which joined the Madrid Protocol on October 8, 2026, are members of the system. It allows eligible trademark owners to seek protection in designated member countries through an international application. However, it does not provide automatic protection throughout the GCC. Kuwait is not a member, and each designated country retains the right to examine applications under its domestic law.
Trademark registration should be supported by a properly drafted franchise and licensing agreement, clear quality-control procedures, renewal monitoring and an effective mechanism for addressing infringement.
Securing Your Brand Before Expansion
Franchising can turn a successful local business into a regional or international enterprise. However, the commercial opportunity is only as secure as the legal rights supporting it.
A prospective franchisee is investing in a shop, restaurant or service operation, but is also paying for the right to trade under a recognised brand and benefit from another business's reputation. The franchisor must be able to demonstrate that it owns, controls or otherwise has the legal authority to license the intellectual property involved.
Failure to address trademark protection before expanding into the UAE and GCC can turn a growth strategy into a costly legal exercise. Securing the brand before granting franchise rights places the business in a stronger position when negotiating with partners, protects franchisee investments and reduces the risk of disputes over ownership and use.
A franchise agreement may establish the commercial relationship between two businesses, but the trademark rights behind it provide the brand with its legal foundation. Protecting those rights should be one of the first decisions a business makes when preparing to franchise.
Dr. Sunil Ambalavelil is the Global Executive Chairman of Kaden Boriss, an international law firm specialising in franchise and business agreements. A seasoned legal adviser, he has advised and supported the international growth of numerous global brands, helping them navigate the legal complexities of cross-border expansion.
For enquiries or further information, contact ask@tlr.ae or call +971 52 644 3004. Follow The Law Reporters on WhatsApp Channels.