12 August 2016Trademarks

KFC sues former franchisee in trademark spat

Fast food chain Kentucky Fried Chicken (KFC) has sued a former franchisee for using the multinational’s trademarks without a licence and for allegedly failing to pay royalties to the chain.

In a lawsuit filed at the US District Court for the Western District of Kentucky yesterday, August 11, KFC said a franchisee based in California should be found liable for trademark infringement and forced to pay the licensing fees it owes—amounting to $10,000.

The restaurant, called Chooza and based in the town of Fullerton, acquired a licence to use KFC’s trademarks in 2007.

Under KFC’s licensing agreements franchisees are granted a licence to use KFC-owned trademarks including ‘Kentucky Fried Chicken’ and ‘Finger Lickin’ Good’ as well use KFC branding – they also have access to approved food suppliers.

The agreement between the companies was amended in 2015, giving Chooza the rights to retain use of the trademarks and preparation methods on the basis that it submitted monthly royalty payments and a portion of its advertising revenue to KFC.

But earlier this year KFC said the agreement was terminated due to failed payments.

The multinational demanded that the restaurant and its owner, Gazi Ghori, stop operating under the KFC name so as to “eliminate any confusion”.

But according to the complaint the restaurant failed to remove the KFC branding and continued to operate as a KFC even though its access to KFC’s food suppliers had been cut off.

The defendants, the complaint added, have since closed the restaurant but have claimed on signs at the building that the closure is only temporary.  The outstanding royalty payments have yet to be paid.

“Defendant is falsely representing itself to the public as a KFC licensee. Defendants’ acts have caused and will continue to cause irreparable injury to KFC,” the complaint said.

KFC is demanding treble damages, attorneys’ fees and an order preventing Chooza and its owner from operating a similar business within a ten mile radius.

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