Trademark explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The brand is usually the most valuable thing a franchisor hands over, so the trademark licence inside the franchise agreement deserves its own drafting. It decides what the franchisee may use, where and how, who controls quality, and what happens to the marks when the relationship ends. This guide concentrates on that licence: a specimen brand licence schedule, an explanation of each clause, and the Trade Marks Act position on permitted use and registered users. For the whole agreement, see our full franchise agreement specimen and the legal framework guide. If you want the licence drafted or the registered user filing prepared, our trademark registration team can help.
A trademark licence in a franchise should state the marks licensed, the goods or services covered, the territory and outlet, the right to use only as the manual allows, the franchisor's control over quality, ownership of goodwill, the duty to report infringement, and what stops on exit. Under the Trade Marks Act, 1999, a person other than the registered proprietor may be registered as a registered user (section 48), on a joint written application accompanied by the agreement and an affidavit about the relationship and the degree of control (section 49). Permitted use is treated as use by the proprietor.
Why the licence needs its own clauses
A franchise agreement mixes many subjects: fees, supply, staff and premises. Intellectual property gets lost in the middle. A separate schedule on the brand licence keeps the rights tidy and makes it easier to file the agreement with the Registrar if you choose to register the franchisee as a registered user.
Three questions should be answered in writing.
- Which marks, logos, trade names, domain names and trade dress are licensed?
- What may the franchisee do with them, and what may it not do?
- Who decides whether the use is good enough, and what happens if it is not?
What the Trade Marks Act says about licensed use
The Act uses the idea of "permitted use" for use of a registered mark by someone other than the proprietor. In the text consulted, section 2(1)(r) defines permitted use by reference to use by a registered user of the mark in relation to goods or services with which he is connected in the course of trade, for which the mark remains registered and for which he is registered as a registered user. Our post on section 2 definitions explains the vocabulary.
Section 48(1) says a person other than the registered proprietor may be registered as a registered user in respect of any or all of the goods or services for which the mark is registered, subject to section 49. Section 48(2) says the permitted use of a trademark is deemed to be use by the proprietor, and not use by the other person, for the purposes of section 47 and any other purpose for which such use is material under the Act or any other law. See section 48: registered users.
Section 49(1) says that where a person is to be registered as registered user, the registered proprietor and the proposed registered user must jointly apply in writing to the Registrar in the prescribed manner. The application must carry the written agreement between them, or a duly authenticated copy, on the permitted use, and an affidavit by the proprietor or an authorised person giving particulars of the relationship, existing or proposed, including the degree of control by the proprietor over the permitted use. See section 49: registration as registered user.
Practical point: because the Registrar will look at the agreement, keep the licence terms in a schedule you can file without exposing commercial terms such as fees and territory economics.
Specimen brand licence schedule
Attach this as a schedule to the franchise agreement and adapt every bracket.
SCHEDULE - BRAND LICENCE TERMS 1. Licensed Marks. The Franchisor grants the Franchisee a non-exclusive, non-transferable licence, without the right to sub-license, to use the marks, logos, names and trade dress listed in Part A (the "Licensed Marks"), registered or applied for under the following numbers: . 2. Licensed Goods and Services. The licence covers only the goods and services listed in Part B and only for the Outlet at within the territory in Schedule . 3. Manner of use. The Franchisee shall use the Licensed Marks only in the form, colours, size and style shown in the Brand Guidelines dated , and only with the notices the Franchisor requires, including . 4. Quality control. The Franchisor may set standards for goods, services, premises and customer experience. The Franchisee shall meet them, shall supply samples and records on request, and shall allow inspection of the Outlet on . The Franchisor may require correction within of written notice, and may suspend use of a Licensed Mark at the Outlet until correction is made. 5. Ownership and goodwill. All use of the Licensed Marks by the Franchisee is for the benefit of the Franchisor. Goodwill arising from that use belongs to the Franchisor. The Franchisee acquires no right in the Licensed Marks except the licence in this Schedule. 6. Registered user. If the Franchisor decides to apply to register the Franchisee as a registered user, the Franchisee shall join in the application, sign the papers and supply information required by the Registrar. The Franchisee shall support the cancellation of that registration when this Agreement ends. 7. No challenge. The Franchisee shall not, during the Term or afterwards, apply to remove or challenge the Licensed Marks, or claim them as its own, or help another person to do so. 8. Restrictions. The Franchisee shall not: register or use any trademark, company name, domain name, social media name or product name that contains or resembles a Licensed Mark; alter a Licensed Mark; use it outside the Outlet or on goods or services not approved; or use it in a way that disparages the Brand. 9. Online use. The Franchisee may use the Licensed Marks on its own listing, page or app only as approved in writing by the Franchisor and only under accounts the Franchisor controls or approves. On exit, such accounts, handles and content shall be transferred to the Franchisor or closed as it directs. 10. Infringement. The Franchisee shall tell the Franchisor promptly of any infringement, passing off or misuse that it finds. The Franchisor alone decides whether to act and has control of any action; the Franchisee shall give reasonable help at the Franchisor's cost, and shall not take action in its own name unless the Franchisor consents in writing. 11. Third-party claims. If a third party claims that use of a Licensed Mark as licensed infringes its rights, the Franchisee shall inform the Franchisor at once. The Franchisor shall defend the claim at its cost and may change or withdraw the mark, in which case the Franchisee shall change its materials within . 12. Changes to marks. The Franchisor may update the Licensed Marks or Brand Guidelines on notice. The Franchisee shall adopt the change within . Reasonable costs of mandatory changes shall be shared as follows: . 13. Records of use. The Franchisee shall keep samples and dated records showing how it has used the Licensed Marks and give them to the Franchisor on request. 14. Exit. On expiry or termination, the licence ends. The Franchisee shall stop using the Licensed Marks, remove signage and printed material within , deliver or destroy materials as directed, and sign any paper needed to cancel a registered user entry. 15. Remedies. Because misuse of the Licensed Marks may cause harm that damages cannot repair, the Franchisor may ask a court for an injunction in addition to other remedies. PART A - Licensed Marks: PART B - Licensed goods and services:
Clause-by-clause explanation
| Clause | What it does | Drafting tip |
|---|---|---|
| Licensed Marks (1) | Identifies the marks by number, class and owner | Check the register entry before listing; a mark that is only applied for should be described that way |
| Goods and services (2) | Limits the licence to approved goods and services and one outlet | Match the list to the registration; use outside it is unlicensed use |
| Manner of use (3) | Controls how the marks appear | Attach a dated brand guideline and update by notice |
| Quality control (4) | Gives the proprietor control over standards | Control is the key point in the section 49 affidavit; describe it concretely |
| Ownership (5) | Keeps goodwill with the franchisor | State that use is for the franchisor's benefit |
| Registered user (6) | Commits the franchisee to join the Registrar filing | Add a duty to support cancellation on exit |
| No challenge (7) | Stops the franchisee from attacking the marks | Keep it reasonable and linked to the licence |
| Restrictions (8) | Bars look-alike names and unauthorised channels | Include domain names and social handles |
| Online use (9) | Controls digital presence | Decide who owns accounts from day one |
| Infringement (10, 11) | Allocates detection, action and defence | Give the franchisor control; set a cost rule |
| Changes (12) | Allows brand refresh | Share costs fairly and give notice |
| Records (13) | Keeps evidence of use | Dated samples help later |
| Exit (14) | Stops use and tidies the register | Set a removal period |
| Remedies (15) | Preserves injunction | Pair with a disputes clause in the main agreement |
Other law that touches the licence
The Contract Act, 1872 applies to the licence as part of the agreement. A restriction that continues after the term must satisfy section 27, which makes an agreement in restraint of trade void to the extent of the restraint; see non-compete clauses under section 27. An exit payment must be a genuine estimate of loss; see liquidated damages and penalty.
For infringement, sections 29 and 30 of the Trade Marks Act deal with what counts as infringement and the limits on a registered mark's effect; see section 29 and section 30. Our guides on trademark licence agreements and the trademark licence draft template go deeper on stand-alone licences.
Section 48(2) speaks of the permitted use of a trademark, which section 2(1)(r) ties to a registered user. Take advice on whether to register the franchisee as a registered user in your case.
For tax on royalties and brand fees, see our income-tax guides and the post on TDS for franchises.
Stamp duty, registration and execution
The licence schedule forms part of the franchise agreement, which is ordinarily an instrument chargeable with stamp duty fixed by the Stamp Act and Schedule of the State where it is signed. No amount is stated here; see stamp duty on legal documents, State-wise. A registered user application is a separate filing before the Registrar under section 49 and follows the forms and procedure then in force; check the current forms on the official portal before filing.
Execution: sign the schedule together with the main agreement, initial each page, attach reproductions of the marks, and keep a dated copy of the brand guidelines referred to.
Common mistakes
- Listing marks that are not registered or not yet applied for as though they were registered.
- Licensing a mark for goods or services outside the registration.
- Writing quality control in general words only, so the proprietor cannot show real control.
- Allowing the franchisee to register a domain name or social handle in its own name.
- Failing to require the franchisee to join in or cancel a registered user entry.
- Saying nothing about infringement, so no one knows who may sue.
- Forgetting what happens to signage, printed material and online accounts after exit.
- Making the licence exclusive when the franchisor wants to keep other channels.
Need help with the brand licence?
If your marks are not yet registered, start there. The registered user provisions apply to a registered trademark, so registration comes first. Our trademark registration service covers filing, and our team can align the licence with the registration.
Key takeaways
- Put the brand licence in its own schedule so it can be read and, if needed, filed.
- The Trade Marks Act deals with permitted use and registered users in sections 48 and 49.
- Control over quality is the core of a valid licence; write it concretely.
- Keep goodwill, online accounts and domain names with the franchisor.
- Plan the exit: stop use, remove signage and cancel the registered user entry.
Read next
- Franchise agreement: full specimen with clauses explained
- Franchise agreements in India: the legal framework
- Trademark licence and registered user agreement
- Protecting trade secrets with an NDA
Disclaimer: This specimen is a general model for information. Every document must be adapted to its facts and to the law, rules and forms in force when it is signed or filed; stamp duty, registration and court fees depend on the State and the forum. This article is general information, not legal advice; check the official text before acting.