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Making your re-brand a success - a legal point of view

The UAE-based healthy fast food chain Just Falafel, which operates in 18 countries, announced this week that it was rebranding itself as 'JF Street Food'. The company will be choosing a new look and The UAE-based healthy fast food chain Just Falafel, which operates in 18 countries, announced this week that it was rebranding itself as 'JF Street Food'. The company will be choosing a new look and menu and has also launched a global competition to redesign the signature on its caps and aprons worn by staff. A separate contest will be held to choose a mural that will feature in its outlets.

Consumer brands need to evolve and keep pace with shifting consumer habits and technological developments. The likes of McDonald's, Starbucks, Cadbury's, Apple, Microsoft and Lego have all undergone various rebranding exercises and adapted their product and service offerings. However, updating or reinventing a brand needs to be handled with care - brands need to keep a clear focus on their core values and ensure than the changes build stronger emotional connections with their customers.

Here are some key legal points for a brand to consider before embarking on a re-branding exercise:

  • Ownership - if third party designers or consultants or, in the case of Just Falafel, customers have advised on or contributed to the re-branding exercise, it is important that the brand ensures that all rights in the relevant materials vest in the brand and that this can be evidenced. Copyright will vest in the author unless it has been assigned in writing.

  • Brand Protection - make sure that prospective changes do not infringe third party rights. In the case of trade marks, it is important to carry out clearance checks and obtain appropriate registrations for changes to the existing trade name and logo or the launch of a new trade name and logo. If the brand is extending into new classes of products  and services, the scope of the registered protection should be broadened. Designs rights and patents may also be relevant.

  • Contractual Flexibility -  for brands which operate through networks of licensees or franchisees, it is important to consider the impact of the re-brand on those relationships and whether the brand has the flexibility to implement the its plan without creating contractual liability. In the franchising context, it is important that the franchisor remains the "admiral of the ship" and has express contractual powers to substitute, add to or withdraw trade marks and other indicia which comprise the licensed brand, ideally without the licensee being eligible for any compensation. Clearly, giving licensees and franchisees as much forewarning as possible will help reduce the risk of push back and enable the network to manage the process effectively.

  • Derogation of grant - Again, for brands which operate through networks of licensees or franchisees, it is important to consider the commercial impact of the re-brand and ensure that the changes do not substantially impede the franchisee's or the licensee's rights under their agreement. This issue was considered by the English courts in a franchising case called Fleet Mobile Tyres v Stone (2006), in which it was held that the franchisor's decision to require its franchisees to re-brand and provide a new service under an e-commerce model amounted to a fundamental breach of the franchise agreement, allowing the franchisee to terminate the agreement, free from post termination restrictions and claim damages from the franchisor.


The most successful re-brands are launched out of a sense of opportunity, not necessity. If time permits, brand owners should begin conceptualizing their rebranding initiatives long before they start them, by anticipating market trends, looking for a favorable time to reposition and ensuring that any potential legal obstacles are identified and overcome.

 

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