Trademark Licensing Agreement (Canada)
Licensing your trademark to a franchisee, manufacturer, distributor, or partner (or taking a licence from someone else): the agreement must do more than transfer permission. It must preserve the mark’s validity through proper quality control.
Onley Law drafts and negotiates trademark licence agreements that comply with section 50 of the Trade-marks Act, structure royalties and reporting properly, and handle termination, sub-licensing, and post-termination cleanly.
What’s Included
- Term sheet review or drafting and negotiation strategy
- Drafting of the full trademark licence agreement
- Section 50 quality control provisions to preserve mark validity
- Royalty structure and reporting requirements
- Permitted use restrictions (channels, geographies, products, sub-brands)
- Sub-licensing and assignment provisions
- Term, termination, and post-termination obligations
- Trade-mark registration recordation considerations
Section 50 Compliance
Quality control provisions drafted to comply with the Trade-marks Act so that licensee use is deemed use by the trademark owner.
Fixed-Fee Quote
Drafting and negotiation through execution is quoted as a fixed fee. We confirm scope and quote within one business day of intake.
Quality Control Built In
Our standard licence template includes practical quality control mechanisms, not just paper compliance.
How It Works
Term Sheet and Strategy
We review or draft the term sheet covering scope, royalties, term, exclusivity, and territory. We flag the legal issues that need attention.
Drafting
We draft the full agreement with section 50 quality control provisions, royalty mechanics, and termination structure.
Negotiation
We negotiate revisions with the other side, balancing protection of the mark with commercial flexibility.
Execution
We finalize, you sign, and we provide guidance on whether to record the licence with CIPO or keep it unrecorded.
Frequently Asked Questions
What is a trademark licensing agreement?
A trademark licensing agreement is a contract under which the trademark owner (the licensor) grants another party (the licensee) permission to use the trademark on specified goods or services, within agreed parameters, in exchange for royalties or other consideration. It is distinct from an assignment (which transfers ownership) and from a franchise agreement (which is broader).
What is the quality control requirement under section 50 of the Trade-marks Act?
Section 50 of the Trade-marks Act provides that use by a licensee is deemed to be use by the trademark owner, but only if the owner has direct or indirect control over the character or quality of the goods or services. Without proper quality control provisions, the licensed use may not benefit the owner’s registration and could even weaken or invalidate the mark.
How does licensing affect my trademark registration?
Done correctly (with section 50 quality control), licensing strengthens your registration: licensee use counts as your use, which can be relevant for non-use cancellation proceedings and for showing distinctiveness. Done incorrectly (without proper quality control), it can weaken the mark and put the registration at risk.
Do trademark licences need to be registered with CIPO?
No. CIPO does not have a mandatory licence recordation system for trademarks. Recordation is optional and is rarely done in practice. The quality control provisions in the licence (and actual quality control practice) are what matter for validity, not recordation with CIPO.
What royalty structures are typical in trademark licences?
Typical structures include: a flat annual fee; a percentage of net sales (often 2 to 8 percent depending on industry); a minimum guaranteed royalty plus a percentage; or a hybrid with milestones. Franchise-style licences often include an upfront fee plus ongoing royalties. The right structure depends on industry, deal economics, and reporting capabilities.
Can I sub-license my trademark to a third party?
Only if your licence permits sub-licensing. Most licences do not allow sub-licensing by default; it must be expressly granted. If sub-licensing is permitted, the sub-licence must include the same section 50 quality control provisions to preserve the chain of deemed use.
Need a Trademark Licence Agreement?
Tell us about the licensing arrangement (who, what mark, what scope) and we will provide a fixed-fee drafting quote within one business day.
Need to register the mark first? See our Trademark Registration service →