Restaurant owners need to be vigilant in protecting their brands because positive public impressions can translate into more customers and higher sales.
The last thing those owners need is for a same-named business in a neighbouring jurisdiction to operate in a sloppy manner.
A food-poisoning outbreak, contentious labour negotiations and executives with legal problems are only a few crises that could give a business a black eye.
Two Vancouver restaurant chains have, however, survived decades as completely different operations with entirely different ownership structures on each side of the Canada-U.S. border: A&W and the Old Spaghetti Factory.
The two A&W businesses date back to 1956, when entrepreneur Dick Bolte brought what was then a 37-year-old U.S. brand to Canada. He opened a string of successful restaurants. Bolte then bought the A&W trademark outright for Canada—lock, stock and barrel.
He was able to create whatever menu items he wanted and set up his own supply chains for ingredients.
Executives in the decades since have successfully created a positively perceived brand for the North Vancouver-based A&W business.
Independent brand-valuation company Brand Finance has ranked A&W as Canada’s strongest brand for two years running. It weighs marketing investments, stakeholder equity and business performance in its calculation, it said in its April report.
“I don’t think that would ever happen today,” A&W CEO Susan Senecal said of a franchise business selling its brand to someone in another country with no safeguards on how it could be used.
She said she believes that the concept of having licensing agreements is now more established and that business owners are more aware of risks.
Lawyers are not as confident.
“I think this absolutely could still happen,” said intellectual-property lawyer and Wotherspoon Law principal David Wotherspoon.
“But it’s not a very smart thing to do because you lose control of how your brand is being managed.”
He said trademark protection is only valid in the country in which a brand is registered. As such, entrepreneurs who operate restaurants and aspire to expand to other countries should register their trademark in those countries ahead of time, he said.
The Canada and U.S. Old Spaghetti Factory businesses, in contrast, coexist without any formal legal document outlining conditions, said Peter Buckley, who owns the Gastown Old Spaghetti Factory, and is a majority owner and CEO of the Canadian company which operates 15 Old Spaghetti Factory restaurants across the country.
The Dussin family launched the Old Spaghetti Factory in 1969 in Oregon while four brothers in the Pulos family launched the brand in Canada, in Gastown, in 1970.
Buckley said the Dussin and Pulos family were connected by marriage.
When the marriage broke up, the two families mutually agreed that the Dussins would operate in the U.S. while the Puloses would operate in Canada, Buckley said.
He added that the two families jointly started the business and that they later came to an informal agreement that each stay on opposite sides of the border, he told BIV.
Each family long ago registered the brand’s trademark in the country in which they operated, Buckley said.
Like A&W, the Old Spaghetti Factory has flourished across North America. The U.S. operation lists 41 locations.
Buckley said his Canadian chain’s guest count increased 18 per cent in 2023, compared with 2022. Sales are up by even more because of increased prices, he added.
His Gastown restaurant, however, has been flailing since construction began on street improvements in March, closing some streets to traffic.
A pedestrian-only pilot project launched when street work was completed, and it continues today despite many Gastown business owners telling BIV that closing streets to vehicles is costing them business.
Buckley estimated that his guest count in Gastown is down 30 per cent from this time last year, and that he is operating with about 110 employees, instead of the 140 he employed in 2023.
“We have watched our volume fall from last year, and continuously it is getting worse and worse,” he told BIV. “It has been extremely challenging.”
Senecal said business at A&W is going well, and the company is focused on a restructuring plan that would see the franchising arm known as A&W Food Services of Canada Inc. buy the A&W Revenue Royalties Income Fund (TSX:AW.UNP), which owns corporate trademarks, and pursue an initial public offering.
