Pros and Cons When Your Family Name is the Brand Name

Posting by Joel C. Susco, CPA

For a family business, it’s not unusual to put the family name as part of, or the entire, brand name. A surname can serve as the trademark, or brand, if it identifies – and distinguishes – the source of the product or service; but it also must not infringe on an existing user’s mark. There are many positives and negatives to consider when naming your family business, changing the firm’s name, or trying to establish a brand with the family name.

Great reasons to give the business and brand your family name

It feels quite natural for a family business to be named for the family and serve as the brand. After all, the business was established to be passed on to the next generation, and serve as a source of pride. As the business grows, a brand for the product or service is established, and may become synonymous with the family name. Successful examples include Hilton, Tommy Hilfiger and Ford. Of course these companies didn’t start out having a recognizable brand. The hard work put into these businesses created the transformation of the family name into the brand name.

Trust is won more easily when one puts his or her own family name on the line, making it front and center, and essentially standing by what the business does and represents. The feeling of family and a sense of values is almost implied, personalizing the experience. The brand being named after the creative force behind the product or service also carries some weight. For example, most fashion designer brands are originally named after the actual designer who is considered to be the primary talent and value of the business. And wineries, typically family-owned, use the family name with pride to represent the heritage and experience of their particular wines.

Cons of putting the brand focus on the family name

Just as being perceived as family and local can be good for a small business, as it grows (or tries to), the effect may be limiting instead. Potential clients, partners and investors may perceive the business as small and limited. And unfortunately, the rarity or uniqueness of a family name can put automatic limitations in place. With the surname Smith, registering one’s family business with the name will likely face obstacles in the form of identically or similarly-named businesses already registered. Registering the name is recommended if it is used by the company and a good brand is established. This will help another company with a similar name from siphoning off business. Several factors play into whether the family name can be registered, and family business advisors and patent attorneys can assist with this determination.

Anything negative that happens regarding your business will be linked to your family name, and thanks to the Internet this information will be retrievable into the far foreseeable future. Of course no family business plans to have problems, be it a family member in a public scandal, an industrial accident in the community as the result of a problem with chemicals used, or having to lay off hundreds of employees from the surrounding community. But the memories of the negative experience may follow your entire family, even if not related to the incident. A small family business may be able to keep the family on task for representing themselves as they would the company, with decorum and a consistent public message. But as the firm grows, getting perhaps dozens of family members to toe the line and not cause any waves in public may simply be unrealistic.

If you actually purchased a business to make into your own family business and it was already named after the previous owner’s family as an established brand, there are several considerations before changing the name. Part of the value of the purchased business is the name, known by clients, vendors and the community. Changing the name may require starting from scratch in establishing the brand that was already known. There are successful family businesses that are named after the original founder’s family, and the brand is so well known on its own that the idea of changing its name if a new family were to buy it would seem ridiculous. For example, Mars (named for founder Frank C. Mars in 1911) is the third largest family-owned business in the U.S., and if another family was to buy the firm they most certainly would not change the well-established brand to their name.

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