Building Brand Equity: The Strategic Advantage Of Trademarking
Creating a brand that is known and trusted by customers can be integral to business growth – and value. However, when it comes to selling a business, the true worth of a brand hinges on the protection of its intellectual property. Registering trademarks for a brand name, designs, content, and patents not only protect a brand from imitation, but also enhance market value. In this article, we explore a scenario highlighting the potential pitfalls of neglecting trademark registration in New Zealand and underscore the benefits of legally protecting a brand.
Sam and Sofia ran a successful bakery business. They launched their bakery after university from a small, rented space on Auckland's North Shore. Over more than 30 years in the business, Sam and Sofia grew their enterprise into a well-known and trusted brand with multiple shops across the North Island. Their brand was distinct and easily recognised by loyal customers across the country who coveted their products. They even won a national contest for one of their famous pastries.
Following their competition win, and with a desire to spend more time with their grandchildren, Sam and Sofia decided it was time to sell the business and enjoy their well-deserved retirement.
They met with their chartered accountant to discuss their plan. The accountant suggested that it might be a good time to undertake a valuation of the business.
When the valuation was received, Sam and Sofia were shocked to discover that their brand — a cornerstone of their business — did not carry as much value as they had expected. This also meant that other businesses might have been able to take advantage of the reputation they had worked so hard to build by using an identical or similar brand.
In the early stages of their business, Sam and Sofia had recalled talking to a friend who worked in the legal industry about registering their brand as a trade mark, but the business had taken off so quickly that it had fallen off their radar.
They immediately sought the help of a local commercial lawyer. Thankfully, their brand was still available for registration in the trade mark classes they required. The lawyer assisted them through the application process with the Intellectual Property Office of New Zealand, and their brand was successfully registered as a trade mark in New Zealand a few months later.
Knowing that their brand was protected as a registered trade mark for the next ten years (with the possibility of renewal) gave Sam and Sofia the confidence and peace of mind to proceed with advertising their business for sale. They soon found a buyer willing to purchase the business and were delighted to discover that the registered trade mark increased the total sale price of the business above the original valuation.
Creating a brand that is known and trusted by your customers can be integral to the growth and value of your business. By registering your brand as a trade mark, you not only ensure the protection of your brand but also create another valuable asset for your business.
If you are looking to protect your brand or feel that you could use some specialist advice, get in touch with our Commercial Team.
