Author: Michelle Waknine
Michelle Waknine, Associate, Fladgate LLP (firstname.lastname@example.org)
The recent case of Ghias v (1) Grill’O Xpress Ltd (2) Malik considered the compensation payable where a franchise brand is used after the termination of the franchise agreement without the permission of the brand owner.
The claimant, Ghias, was the franchise brand owner of a group of fried chicken restaurants trading under the names “GRILLER” and “GRILLO” (registered as UK trade marks by the claimant).
The defendants entered into a franchise agreement with the claimant for the use of the claimant’s brand, however, following termination of the agreement, the defendants changed the name of the restaurant to “Grill’O Xpress” which the claimant argued was an infringement of its brand.
The courts ruled in the claimant’s favour and found that an infringement had occurred, and compensation was claimed by the claimant on the following two grounds:
Assuming that this decision would apply to any similar dispute involving a franchise brand, e.g. hotel franchise brands, this case produces interesting results for the franchise world. In particular, due to the court’s reserved approach to issuing additional damages (even where there has been “knowing infringement”), this case can be considered as a blow for franchise owners. The fact that the franchise owner in this case was considered to be liberally compensated by receiving just a 2.75% uplift on fees he would have received had a franchise agreement been in place, also certainly begs an interesting question as to whether this is a sufficient deterrent against the use of a franchise brand name without permission/an agreement in place with the brand owner.