By Eric Perrott, Esq. & Sophie Edbrooke (Law Clerk)
Licensing a brand from another company can be a great way to show affiliation and benefit from the recognition that the existing brand already has. When a business enters into a licensing agreement with a major company, they are allying themselves with not just the brand, but its reputation and goodwill as well.
What happens when the brand you license no longer reflects your company’s values?
On June 6, 2020, over 15,000 gyms across the world found themselves with the decision of whether to continue to ally themselves with CrossFit, a brand known for high-intensity interval training workout programs. As affiliates of CrossFit, these gyms have advertised this specific brand of workout and pay a yearly fee to use the mark; however, when the CrossFit CEO wrote a series of insensitive tweets about COVID-19, racism, and the recent death of George Floyd, many licensees feel that they can no longer align themselves with a company that does not share their values.
Many affiliates have decided to use this as an opportunity to create their own brand separate from the CrossFit identity by choosing new names and staking out on their own. These gyms have amazing potential to build their own brand and legacy, while still maintaining total control over their identity.
However, with this opportunity comes a number of challenges, and when it comes to developing new brands, there are a few things you should consider.
A License is a Contract
Firstly, look at your license. A licensing agreement is a contract, so make sure you know what you can or cannot do under those terms. Many gyms are facing renewal periods and choosing not to renew or choosing to wait out the remainder of their renewal period abiding by the licensing rule. For example, CrossFit requires that “The CrossFit Journal” logo and link remain on the homepage of the affiliate’s website for the entirety of their agreement. Not all licensing agreements are the same, and some may have more stringent requirements – so make sure you check out your individual requirements.
As a current or former licensee, you may be limited in ways other gyms may not be. Understanding and analyzing your agreement is crucial to avoiding legal liability.
Building a Brand – Trademark Search and Analysis
Many licensing agreements have terms (i.e. one-year, two-years, etc.) and specific requirements for terminating the agreement. Once the agreement concludes or expires, former affiliate gyms can rebrand themselves as individual gyms and can start working on their own identities and messages.
The first thing that gyms will need to do is create a new name since many CrossFit gyms are named after their location and their affiliation.
When developing a new name and brand, gym owners should start by doing a basic web search for their proposed name – this will uncover any immediate red-flags. Then, gym owners should work with a trademark professional to do a comprehensive search of the US Patent and Trademark Office database and marketplace for a deeper analysis of potential issues with pre-existing names. This will help ensure that the name under consideration is not confusingly similar to a name currently being used by another gym.
Also, gyms should try to be as creative as possible with their new names. Names such as