Licensees, franchisees and names under your TLD

A brand that works through licensees or franchisees already lends its name to people it does not employ. The sign above the door, the uniform, the product label and the local web page all say the same thing: this business is part of the network. A name under your onchain TLD says it too, in a form that software can read and that anyone can check.

That makes it a different object from a staff name or a product name. A franchisee is an independent business with its own bank account, its own customers and, one day, its own exit from the network. A name such as city.yourbrand gives that business a visible place inside your namespace. It also creates a question your trademark license probably does not answer: who holds that name, what may it point to, and what becomes of it when the relationship ends.

This article is written for the brand owner, the franchise director and the lawyer who maintains the network agreements. It covers which third parties should receive a name, the two ways to hold it, the conditions to write into the agreement, and the honest position on termination. It includes a purely organizational example built on a network of 40 franchisees.

What a name under .yourbrand tells the public about a franchisee

An onchain TLD is a top-level name recorded on a blockchain instead of in the DNS. On Freename, the TLD exists as a token sitting in a wallet, and whoever holds that token is the only party able to issue names beneath it. Nobody else can create city.yourbrand. That single fact is what gives a network name its meaning.

In the DNS, a customer who sees a local domain with your brand in it cannot tell, from the domain alone, whether you approved it. Under a TLD you hold, the suffix itself carries the approval. A name ending in .yourbrand was issued by you or it does not exist. For a network, the TLD becomes a public roster: the names under it are the members you recognized, and because that record is public, a customer, a bank or a journalist can look a member up on a block explorer.

The strength is also the exposure. Every name you issue is a statement by the brand. If a name keeps pointing to a former franchisee’s payment address after the agreement has ended, the roster is wrong, and it is wrong under your suffix. The rest of this article is about keeping the roster true.

One limit belongs here and not in a footnote. These names do not live in the DNS. A standard browser needs added support before it opens one, and coverage across wallets and browsers is partial and changes over time. A franchisee’s main web address, its email and its search presence stay on DNS domains. The name under your TLD is an additional identifier for the places where it works, such as wallets that resolve onchain names.

Which members of a licensed network should receive a name

Not every party that touches your mark needs a place in the namespace. A useful test has two parts. Does the party deal with the public under your brand? And would a customer or a counterparty be better protected by being able to verify that party under your suffix? Where both answers are yes, a name is justified. Where the party only manufactures, ships or advises behind the scenes, a name adds a line to the roster that nobody consults and that somebody must still maintain.

Two points refine the table.

First, a name should correspond to something the agreement already defines. Franchise agreements grant a territory, a site or a number of outlets. Product licenses grant a category in a region. If the name maps to the grant, the conditions for keeping it are the conditions for keeping the grant, and you avoid writing a second set of rules.

Second, decide between a name per legal entity and a name per outlet. A name per entity is simpler to count, but the public does not think in entities. A customer pays the shop on a given street, not the company behind it. A name per outlet matches what the customer sees, and when a multi-outlet franchisee sells one site to another member, one name changes hands in your records without disturbing the others.

Who holds the name: the brand’s wallet or the franchisee’s

This is the decision that shapes everything after it, and it is best made once for the whole network. A name under your TLD is itself an onchain record held in a wallet. You can issue it and keep it, or issue it and place it in a wallet the franchisee controls.

In the first model, the brand holds every network name. The franchisee supplies the details the name should carry, for instance the address where it receives payments, and the brand sets them. The franchisee uses the name. It does not hold it.

In the second model, the name goes to the franchisee’s own wallet. The franchisee then manages what the name points to, in the way that whoever holds a name generally manages its records. The brand issued the name and can see it on the public record, but it no longer has its hands on it.

The table points to a default. For a licensed or franchised network, holding the names yourself is the more coherent choice, because the name is a use of the brand and the license already says that every use of the brand is permitted, not transferred. The name then behaves like the sign above the door: installed for the franchisee, owned by the system.

The cost is real and should be accepted knowingly. If you hold the name and set the payment address, a mistake in that address is your mistake. A request to change it must be verified with more care than an ordinary support ticket, because the person asking may not be the franchisee. That argues for a written change procedure, covered below, and for a small number of people allowed to act.

The second model is not wrong. It suits a master franchisee who runs a country with real autonomy, or a long-term licensee who integrates the name into its own systems. But it should be chosen with one fact in view: a name sold or handed to a third party is theirs. What you can do about it afterwards is a matter for the contract and for the registry’s terms, not something to assume.

A naming convention that survives changes in the network

Networks change shape. Franchisees buy each other’s sites, territories are redrawn, an outlet moves across town. A naming convention chosen for the first twenty names has to hold when the membership has turned over several times.

Name the place or the function, not the person or the company. city.yourbrand survives a change of operator. A name built on the franchisee’s company name does not, and it turns every transfer of a site into a renaming exercise with reprinted material. Naming the place also keeps the franchisee’s own trade name out of your namespace, which avoids a later argument about who has rights in the combined expression.

Keep the pattern uniform. If outlets are named by city, name all outlets by city, with one agreed rule for cities that have several outlets. A customer who has seen two names from the network should be able to predict the third. Predictability is also a protection: an irregular name stands out, to your team and to the public.

Reserve the names the franchisor uses itself before issuing any to the network: the names for payments to head office, for support, for recruitment of new franchisees, and the generic words a member might reasonably ask for and should not have. A franchisee whose name reads like a head office function creates the confusion the namespace was meant to remove.

Conditions to write into the license or franchise agreement

Most trademark licenses and franchise agreements were drafted before anyone thought of onchain names, and their general language on “domain names” or “digital identifiers” may or may not reach them. Do not rely on a favorable reading. Add a short schedule, or an addendum for existing members, that treats the name expressly. What follows is information in general terms. Franchise and license law varies considerably from one country to another, some countries regulate franchise disclosure and termination closely, and your own counsel decides what your agreements say.

Three of these deserve more than a cell.

Permitted records. A name can carry several kinds of record, including payment addresses and a pointer to a site. List what the franchisee may ask you to set, or may set itself. A payment address for the franchised business is an obvious yes. A pointer to a site selling something outside the franchise is an obvious no. The middle ground, such as a franchisee’s own loyalty scheme, is where you want a rule before the request arrives. If customers will pay the outlet through the name, read how payments to a name work before drafting.

Change procedure. This is the clause that prevents the costly mistake. Require that a request to change a payment address come from a named contact, through an agreed channel, and be confirmed through a second, independent channel before anyone acts. Give your own team a short waiting period for such changes. The procedure will feel slow to a franchisee in a hurry. It is slow on purpose.

Liability. The fair rule follows the hands. If the brand set a record on instructions that were correctly verified, the franchisee answers for the instructions. If the brand set it wrongly, the brand answers. If the franchisee holds the name and sets its own records, the franchisee answers, and owes the brand an indemnity for harm done under the suffix. Your counsel will fit this to the liability scheme your agreements already use.

Issuing a name to a franchisee, in order

The issuance itself is the short part. What surrounds it is not. The sequence below assumes the brand holds the names, which is the default argued above, and it works with small changes for the other model.

1. Confirm the grantCheck that the franchise agreement or license is in force and that the name requested matches the territory, site or category it grants.
2. Agree the nameApply the naming convention. If the natural name is taken or reserved, settle the alternative in writing before anything is issued.
3. Collect the recordsObtain from the named contact the details the name should carry, and confirm any payment address through a second channel.
4. Issue and setIssue the name under the TLD from the holding wallet and set the approved records. Two people should see the values before they are saved.
5. Test where it resolvesTry the name in each wallet and browser you intend to mention to customers, and send a small test payment if the name will receive payments.
6. Record itEnter the name, the outlet, the agreement reference, the contact and the date in the network register, with a link to the public record.
7. Brief the franchiseeExplain where the name works, where it does not, how to request a change, and how the name may be shown on local material.

For an existing network, issuance is a project, not a series of favors. Plan it by region or by cohort, with a fixed date per group, so that the whole roster becomes true at a known moment. A roster that covers half the network for a year tells the public that the other half are not members. The free launch roadmap tool can help sequence that rollout alongside the other first uses of the TLD.

A worked example: organizing a network of 40 franchisees

The following is an example with assumed figures, and it is purely organizational: it counts names and tasks, not money. Assume a brand that holds .yourbrand and has 40 franchisees. Assume 34 of them operate one outlet each and 6 operate three outlets each. Assume the brand chooses a name per outlet, holds every name itself, and reserves 8 names for its own functions. Assume that over the following twelve months 3 single-outlet agreements end without a successor and 5 new single-outlet franchisees join, and that each active outlet asks for one record change in the year.

At the start, the 34 single-outlet members account for 34 outlets and the 6 multi-outlet members for 18, which gives 52 outlets and therefore 52 network names. With the 8 reserved names, the brand manages 60 names under the TLD.

At the end of the period the brand has issued 57 network names in total, of which 54 are active and 3 are retired, and it still holds its 8 reserved names.

The numbers are small, and that is the lesson. The work is not in volume. It is in four recurring tasks that somebody must own.

The first is onboarding: 5 runs of the issuance sequence in the year, each tied to an executed agreement. The second is change requests. At one record change per active outlet, with 52 to 54 active names through the year, that is around fifty verified changes, roughly one a week, each needing two channels and two people. The third is offboarding: 3 names to neutralize on the day the agreements end, discussed in the next section. The fourth is the periodic review, where every active name is compared with the register of agreements in force.

Finally, the 3 retired names should not be reissued at once. A customer who paid the former outlet through a name may try again from memory. A quarantine period, set in the operations manual, during which a retired name points nowhere, protects that customer and the incoming franchisee alike.

When the license ends: what you can and cannot count on

Every franchise and license agreement has a section on what the former member must stop doing: take down the signage, return the manuals, stop using the marks. The name under your TLD belongs on that checklist, and the two holding models diverge sharply here.

If the brand holds the name, the end of the license is an internal operation. On the effective date you clear the records, so that the name no longer points to the former franchisee’s payment address or site, and you mark it retired in the register. Nothing has to be recovered from anyone. The former member’s cooperation is not needed, which matters most in exactly the terminations where cooperation is least likely.

If the franchisee holds the name, the position is less comfortable, and it should be described without optimism.

In practice this means the contract has to carry the weight. Provide that the member must return the name to a wallet you designate when the agreement ends, within a stated period, and must clear its records in the meantime. Provide that the obligation survives termination. Consider whether your usual remedies for continued use of the marks after termination extend to the name, and say so expressly. None of this guarantees performance by a former franchisee who has stopped answering, and the available remedies depend on the country and on your agreement. It does give your counsel a clear obligation to enforce.

There are also softer endings to plan for. A franchisee who sells the business to an approved successor should not keep the name: the successor steps into it, with new records and a fresh verification. A license that expires and is renewed needs no change to the name, only a new date in the register.

Whatever the model, tell the public. The roster is only useful if a name that has stopped being valid stops looking valid. Clearing the records does that for software. For people, an updated page of authorized outlets on your DNS website remains the reference most customers will consult.

Where the DNS and the ordinary contract still do the work

It would be a mistake to load this namespace with more than it can carry.

The name does not replace the franchisee’s local web presence. Customers look for outlets through search engines and maps, which work on DNS domains. Whatever rule you already have about local domains and social accounts remains necessary, and the onchain name is one more identifier beside them.

The name does not enforce the agreement. If you hold it, you can change what it points to. If the franchisee holds it, the public record shows you what happened, and the contract is how you respond. In neither case does the technology decide a dispute.

The name does not protect you against look-alikes outside your TLD. A third party cannot issue a name under .yourbrand, but nothing in your TLD prevents a similar-looking name elsewhere. That is a monitoring question, separate from the roster, and the same watch that covers your marks should cover your network names, for instance through a namespace watch.

A first inventory before you issue any network name

Before the first name goes to a franchisee, assemble four things. A register of agreements in force, with the territory or site each one grants and its end date. A decision on the holding model, recorded with its reasons. A naming convention with the reserved names set aside. And an addendum your counsel has approved, ready for existing members to accept before their name is issued, not after.

Then run the sequence on a small group. Five outlets in one region is enough to find the gaps: the contact who is not the right contact, the payment address that changes twice in a month, the wallet where the name does not appear as expected. Fix the procedure, write it into the manual, and extend it by cohort.

All of this presupposes that you hold the TLD that matches your brand. If you do not know whether it exists or who could issue names under it, the free Trademark Name Check on the trademark TLDs page is a reasonable place to start. Where the TLD has to be acquired first, an organization can mandate Hush Partners to find and approach its holder under a mutual NDA, a service described under brand namespace recovery, and the page for brands and legal teams sets out how such a file runs. If the TLD is already in your wallet, the next step is the inventory above, and it is work for your franchise and legal teams.

Questions people ask

Should the brand charge franchisees for their name?

Pricing is in the holder’s hands: you decide what a name under your TLD costs, and the figure need not be the same for every name, so you can charge or not. In a franchise, the name is usually better treated as part of the brand system covered by existing fees, because a separate charge can look like a sale of the name and blur the point that no ownership passes. Your counsel should check how local franchise rules treat additional fees.

Does holding all the names mean one person at head office controls the network’s payments?

It means the wallet that holds the names can change where they point, so that wallet deserves the controls you would apply to a payment system. A multisignature wallet, which requires several approvals for one action, and a rule that two people check every record change are common ways to avoid dependence on one person.

What should a franchisee print on local material?

Only what is true for the customer who reads it. If the name is shown, it should be accompanied by a plain mention of where it works, since resolution is partial and changes, and the outlet’s DNS web address should remain the primary reference.