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Don Sniegowski's picture

Firehouse Subs never had rights to trademark

I see that the NY Times covered the supposed turnaround of Firehouse Subs. The franchising company had a bipolar franchisor disorder. Faced with sinking sales, the franchisor got depressed and just gave up, figuring that their franchisees individually could do better. So they cancelled their two percent ad fund and let the franchisees fend for themselves in their local market.

Anarchy didn't work.

Firehouse Subs then came back with a vengence. They then "listened" to their franchisees, who would give advice on centrally controlled national marketing efforts. The franchisor implement a marketing plan at four percent, double the original ad fund rate.  The franchisor declared that top line sales improved.

Of course, Firehouse Subs is up against the very modern system of Subway sandwich shops, in which franchisees take charge of national advertising through their own ad company, where franchisees hire top-notch marketing executives that lead such functions. That franchisee cooperative structure is quite different than just letting franchisees individually fend for themselves to market in their own neighborhoods like Firehouse Subs did.

The irony of all of this now is that the court has ruled that the brand never belonged to Firehouse Subs. Mr. Webster points out that the franchisees are paying royalties and fees for something that isn't the franchisor's to give.

Legal questions to trademark experts

The ruling says that the federal jury ordered cancellation based on fraud being used to obtain the Firehouse Subs trademark. I thought the U.S. Patent & Trademark office was the one to cancel a trademark since they are the ones that grant it. No? Or is this just a formality?

  1. In doing due-diligence, would a franchisee be able to catch the fact that Firehouse Subs never really owned its trademark? Experts here tell franchisees that one of the first things they should do is to look on the US Patent & Trademark site to see if the franchisor does indeed own the trademarks. Would that have helped Firehouse Subs franchisee wannabees? Right now a search on USPTO says, "Sorry, no results found for 'Firehouse Subs'."

  2. How strong are franchise agreements if the franchisor doesn't hold the brand trademark at the time the contract was signed?

  3. What is the franchisor's likely next step? I'm assuming the next step for the franchisor with no trademarked name is to change their name, OR see if they can refile federally for Firehouse Subs. If so, then they pay the millions(??) necessary to purchase the trademark in certain states where the name is already in use by others. Sellers of the trademark would be in a strong position.

As of today, Firehouse Subs continues to use their name and logo on their website. Franchises continue to hang Firehouse Subs signs in front of their stores and use menus and posters with that name.

This is just Don Sniegowski's personal comments and questions in a discussion thread. It is not an investigative news piece that has been edited and vetted for accuracy.


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