Entrepreneurship & Small Business

Can I use the same store name under different corporations?

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  • Jan 5th, 2023 2:52 pm
[OP]
Newbie
Mar 26, 2018
22 posts

Can I use the same store name under different corporations?

Hi all,

I would appreciate if can someone help me with following:

I registered a corporation named abc inc and and plan on opening a store under "abc" (store sign). My question is, do I have to register the the operating name "abc" in order to operate the store? Or that's not necessary because the name is the same as the corporation?

My second question is, I plan on opening a second location with a different partner... And also want it to be protected from the other store .. but we want to use the same operating name as the first store "abc" but would be registered to a numbered corporation such 1274920 inc...
Is this possible? Can we use the operating name abc under different corporations?

If anyone can help me understand this... That would be much appreciated. Thanks!!
2 replies
Deal Fanatic
Sep 23, 2007
5429 posts
1736 upvotes
Corporation name and operating names don't need to be related. For example, your corporation can be called 12345 Inc and your store can be called ABC. After forming your registration name, you should also register ABC as the operating name if they are the same to be safe.

In civil law, use of names is not an issue unless someone find it to be in conflict with their interests. For example, you obviously can't call your store StarBucks. Basically everything is ok until someone sues you. You want to prevent people from suing you. To prevent this, don't use a name that might trigger an issue down the line. The wisdom lies with understanding what COULD trigger an issue down the line.

Another way to think of it is...if you approach a signage contractor and ask them to make a sign for "ABC" to put in your store front, the contractor isn't responsible for vetting if the name "ABC" is trademarked and that you own the trademark. Customers would generally not care, unless your products are inferior. You absolutely can ask a contractor to make a copy of the starbucks sign for you. You can put in in front of your store and pretend to be Starbucks for a month or so. Eventually you'll get a legal letter from Starbucks representative to cease this practice and be asked for a settlement or go to court. If you go to court, you'd obviously not have a case because Starbucks is a registered trademark and you obviously infringed on their rights.

Now you mentioned there's a second location with a different partner. When another body is involved, this is where issues can develop down the line. You have to ask yourself what kind of partner this person is. Do you have control or does he (or both)? If he's a silent partner, then I guess you don't have to worry too much. I don't know what shareholder agreement you have with him. But consider that hypothetically he takes control of the second store and try to cut you out of the loop. Then he starts saying your first store is the fake and that the second store is the legit one. What are you going to do? Don't think to yourself it won't happen. What if you start to fall ill and can't manage the operations? What if he offers to buy out your stake in the ownership down the line?

If you intend to make your business a franchise, what you should do is hold the trademark in a franchisor company. Your first store operate from a separate company. And every single distinct store operate as its own company. Each franchisee store is receiving the "right" to use the "ABC trademark". This will save you a lot of headache down the line. If you consult a lawyer, this is likely the answer you will get. Lawyers have their own incentives to get more services from you. If you want to set up as a franchisor, you'd have to go through a lot of motions to create franchise disclosure documents.

A lot of these things are case specific...I gave very general answers. The thing is...the vast majority of small businesses fail within 3 years. In a losing business, nobody is going to have a reason to copy your name. But if you expect to go big, you should consult with a lawyer to ensure you are protected with the right corporate set up. If you are not willing to invest the couple thousand to get consulted on this topic, then it's like saying you don't believe your business will go big.

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