Family Business Insights: Story Telling - Issue #16

In this issue we discuss the power of storytelling in family businesses, protecting the family brand, and provide an example of how lawyers can help mitigate a contentious split.

Storytelling and Family Splits

A few weeks ago, I found myself at the dinner table with my cousin and his family, engaged in a lively discussion about the extravagant Ambani wedding celebrations in India. My opinion - that the event was a grand spectacle, wasteful, and designed to present the family as a form of new-age royalty—was met with generally polite disagreement.

My nephew, perceptively, noted that the staggering sums of money involved in the wedding had ensured the family and the event itself became a topic of conversation globally. In his view, this publicity was valuable in and of itself, a strategic investment rather than mere extravagance.

As the conversation evolved, my cousin recalled that there were two brothers, but only this particular brother was the successful one - known to be the cleverer one, and the hardworking one. (Presumably, the other brother was unsuccessful for not having entered the cultural consciousness, failing to amass unbridled levels of wealth, or neglecting to buy enough rich and powerful friends. I wasn’t too sure.)

Nevertheless, the impression and sentiment behind the statement got me thinking about the value of storytelling. In particular, after family businesses split – as they often do, the race is on to create a narrative and embed a story.

The family members who emerge with the larger share of the business may feel compelled to establish themselves not just as the rightful heirs but as more capable and generous. The mythmaking often starts even before the split is finalised. Meanwhile, those who end up with less might seek to paint others as greedy (rather than merely lucky, or perfectly entitled).

At this juncture, there is often both an emotional interest, and yes, a legal one.

From an emotional standpoint, no one wants their family history overshadowed by the narrative of a more successful relative. Whether it’s the Ambani’s or any other family, having the family’s story told from a limited perspective can be deeply unsettling.

But beyond emotions, the legal implications of these narratives can be profound. The family name itself can become a valuable brand, something to be commercialised and monetised. Here, the involvement of a lawyer is not just beneficial but often essential.

So, how exactly can a lawyer help?

1. Use of Name: When a family business splits, the use of the family name can become a contentious issue. Lawyers can help in negotiating agreements that define who gets to use the name, in what capacity, and under what circumstances. Protecting the integrity of the family name while ensuring it is used fairly will be important to everyone.
2. Defamation: Post-split, emotions run high, and it’s not uncommon for disputes to spill over into the public domain. Accusations of greed, incompetence, or unfairness can arise, damaging reputations. Lawyers can step in to address defamation issues, ensuring that any claims made publicly are either substantiated or retracted to protect the family’s reputation.
3. Contracts: During the process of splitting a family business, contracts can help ensure a fair and equitable outcome to include, non-disparagement agreements and other legal mechanisms.
4. Dispute Resolution: With disputes often arising over the division of assets, management roles, and future business strategies, mediation or arbitration services can help resolve these disputes amicably, avoiding lengthy and costly court battles.

Conclusion

In the end, the story that emerges from a family business split can shape the legacy of every family member, whether born as yet or not. Ensuring that the narrative is fair, balanced, and legally sound is where a skilled lawyer can make all the difference. Whether it’s protecting the family name, managing reputational risks, or securing intellectual property, the right legal counsel can help turn a potentially divisive split into a manageable transition, allowing all parties to move forward with their dignity—and their legacy—intact.

Protecting the Family Brand

Family businesses often carry a legacy that’s tied to their brand name. Protecting this brand is crucial for ensuring that it endures and prospers as it’s passed down to future generations. Whether a small family-run enterprise, or a globally recognised family brand, the importance of safeguarding your brand cannot be overstated.

Being Distinctive

The foundation of brand protection lies in choosing a distinctive, strong, and unique name. A well-chosen name not only differentiates your business in a crowded market but also sets the stage for a legacy that can be legally protected. For example, family brands like Ford, and Mars are not just names; they are powerful identifiers that carry the legacy of the families behind them.

When selecting a name, it’s essential to conduct thorough research to avoid potential conflicts. Start by checking for name aregistry andith Companies House, searching the UK Intellectual Property Office’s trademark registry, and performing an internet search to identify any similar names globally. These steps help prevent future legal battles over name rights, which can be costly and damaging to your business’s reputation.

Trademark Registration

Once you have a distinctive name, the next step is to protect it legally by registering it as a trademark. A registered trademark grants you exclusive rights to use that name for specific goods or services within your jurisdiction. For example, the Gucci family has successfully protected their brands through trademarks, ensuring that their names remain associated with their products and services alone.

Trademark protection is not just about securing your name domestically. If your business operates internationally, it’s wise to consider global trademark protection through systems like the Madrid Protocol. This ensures your brand is protected across multiple jurisdictions, safeguarding it from potential infringements in different countries.

Passing Off

Even with a registered trademark, challenges can arise. A common issue is “passing off,” where another business attempts to benefit from the goodwill your brand has built by using a similar name or logo. While brands like Aldi (the Albrecht family) and Adidas (the Dassler family) have faced such issues, their trademark registrations have provided them with a robust defence against these types of infringements. However, passing off cases can be complex and costly, reinforcing the importance of having a trademark in place from the start.

Protecting the Brand for Future Generations

As your business evolves and eventually passes to the next generation, protecting the brand becomes even more critical. Here’s how you can ensure that your brand stands the test of time:

1.      Education: The next generation must understand the importance of the brand and its legal protection. Involving them in brand management and legal processes ensures they are prepared to uphold the family legacy.

2.      Monitoring: Continual monitoring of the marketplace for potential infringements is essential. Renewing trademarks and adapting the brand to new products or services is crucial for maintaining its relevance and protection.

3.      Evolution: Successful family brands like IKEA (Kamprad family) and Ferrari (Ferrari family) have remained relevant by evolving their brand while maintaining their core identity. Encourage the next generation to innovate and adapt the brand to keep it fresh and competitive in a changing market.

Conclusion

Protecting your family’s business brand is about more than just legal filings; it’s about securing the legacy that your brand represents. By choosing the right name, legally protecting it, and educating the next generation on its value, you can ensure that your family’s business brand not only survives but thrives for years to come. Whether it’s through trademark registration or ongoing brand management, safeguarding your brand is the key to a lasting family legacy.

This article has been adapted from an article by James Oxley, Partner at Harold Benjamin on the topic of protecting business brands.

A Happy Story, where lawyers were involved.

The Aldi family business split between Karl and Theo Albrecht is an example of how legal mechanisms can facilitate an amicable division in a family enterprise. Key legal strategies allowed the brothers split the company into Aldi Süd and Aldi Nord, each taking control over different regions.

clear delineation of assets and operational territories minimised overlap and conflict. Additionally, non-compete agreements ensured that neither brother would encroach on the other's markets, which helped maintain peace and focus on growth.

Despite the divergent paths, both sides continued to collaborate on certain aspects, such as joint purchasing, which allowed them to maintain economies of scale without direct competition. By keeping their businesses independently managed, the brothers avoided the operational disputes that often plague family-run companies. This separation of management ensured that each brother could run their business as they saw fit without interference.

In this case, legal mechanisms and tools helped support each brother to thrive independently, setting a precedent for how family businesses can successfully navigate splits.

This blog is based on an article in the Tharawat Magazine - Aldi: How a Divided Family Business Emerged Stronger than Before.

If you have questions on any of the topics discussed in this newsletter, please feel free to contact me.