A Legal Franchise Lawsuit Filed Against a Former Subway Franchisee
Have you heard of a Subway franchise lawsuit? If not, maybe you should. A case that has made its way to the US Federal Court may change the way franchising companies are regulated and the way they go about their business in the future. It might also have an impact on how much money they pay their franchisees, although experts are split on the amount that a Subway franchisee can actually expect to receive.
So what exactly is a Subway franchise?
It is a restaurant and pizza chain that has many locations all throughout the United States of America and even some international territory. The owner of the company is Frank Shamrock, a former construction worker that started the business with his brother Harry in the Ferry building up their first restaurant in Brooklyn, New York. The company quickly gained popularity because of its foods, sandwiches and desserts, especially their turkey sandwich that was so well known at one time that it actually had a store in New York City.
According to court documents, Shamrock applied for and received a Federal Court trademark license to use the word “Subway” on their stores.
Harry Shamrock then applied for a trademark for the name “SUBWAY” and applied to the United States Patent and Trademark Office. The USPTO rejected both applications stating that both names were confusing and likely to cause confusion among consumers. A representative of the United States patent office eventually visited Shamrock’s restaurant to inspect the business. There the official discovered that there were many signs of dilution of the mark.
The owner, Frank Shamrock, then applied for a new trademark. Shamrock claimed that he had changed the name to “Subway” in an attempt to prevent any competitor from confusing the brand.
The USPTO decided that Shamrock’s claims were valid because of how easy it was for others to confuse the brand. They also determined that because the restaurant has been around for so long, that other consumers would not easily confuse the brand with other restaurants. In the end, the judge ordered Shamrock to pay damages to Shamrock’s competitor because the brand name was being illegally used.
After the owner changed the name, another franchisee applied for permission to use the word “SUBWAY” on their own restaurant.
The franchisee did so in an effort to capitalize on the success of Shamrock’s restaurant. As a result, the owner was forced to file a lawsuit against the two individual franchisees. This has caused much confusion within the legal community because the original complaint was not a violation of a trademark or copyrights.
The owner of the now bankrupted Shamrock’s restaurant is seeking damages from the two individual owners of the now bankrupted Subway franchises.
The owner has asked that a court allow him to collect damages based on the amount of advertising revenue that was lost as a result of the Subway trademarks being illegally used. In the end, the franchisee and owner will have to decide if the value of a successful lawsuit is worth a loss of potential revenue.