Can a Mississippi city license its logo to a private company in exchange for fees per customer the company signs up?

Plain-English summary

The City of Hattiesburg's attorney described a proposal: a private company wanted a non-exclusive license to use the City's branding on marketing and advertising sent by the company to City property owners. The company would pay all costs. The City would receive an annual license fee for each property owner who signed up for the company's services. The proposal would, in effect, have the City endorse the company.

The AG's answer split the question into two layers.

Layer one, can the City license its branding for payment? Yes, in principle. The Home Rule statute (Section 21-17-5) gives broad authority over municipal affairs, property, and finances. Prior AG opinions confirm that public entities can license intellectual property and receive funds for authorized use of their logos and marks (Poole and Arentson 2015, Logan 2013). So the basic transaction is allowed.

Layer two, are there limits? Yes, two important ones.

First, municipalities cannot engage in private enterprise or profit-making ventures. A long line of opinions (Mallette 2012, Holmes-Hines 2012, Murdock 2019, Odom 1997, Doty 1994, Shepard 1991, Allen 1990, Russell 2014) limits cities to "proper government purposes." A municipality "may not engage in private business enterprise unless granted authority by Legislature." A 2014 Shepard opinion specifically held that a sheriff's department could not allow a company to identify the sheriff's office on a calendar in return for a percentage of advertisement-sale proceeds; the AG said "such an arrangement appears to be undertaken solely as a profit making venture."

Second, the AG could not find any authority that "a municipality endorsing a private company constitutes a proper government purpose." Endorsements are categorically different from licensing. A license can be a neutral commercial transaction; an endorsement is the City vouching for a private actor's business. There is no clear municipal authority for endorsement.

Whether the Hattiesburg arrangement crosses the line into profit-making or endorsement is a factual call for the City Council. The opinion ends with a caveat: "there is nothing that would prohibit [a] municipality from accepting any 'profits' offered to it in the form of a donation made by the for-profit organization" (citing the 2013 Ringer opinion). That hedges the line: a payment that is structurally a donation might be acceptable; a payment that is structurally a profit share probably is not.

What this means for you

For Mississippi city attorneys

When a private company proposes to use city branding for a fee:

1. Define what is being licensed. Is it just the logo and city colors (a neutral mark), or is it broader (city seal, city slogan, city-affiliated language that implies a partnership)? Narrower licenses are easier to justify.

2. Define the purpose. Is the purpose to inform residents of a service the city does not provide (e.g., a service that complements city services without replacing them)? Or is the purpose primarily to generate revenue for the city? The first is more defensible.

3. Avoid endorsement language. The license should be clear that the city is not vouching for the company's services. The marketing should describe the service factually, not promote it. A disclaimer like "The City makes no representation about the company's services" can help.

4. Avoid per-sign-up payments. Per-sign-up payments look like profit-sharing and trigger the profit-making-venture concern. A flat license fee for the use of branding is more defensible. If the council wants performance-based payment, structure it as a flat fee with adjustments tied to broader factors, not direct sign-ups.

5. Document the public purpose on the minutes. The council should make findings about why the partnership serves municipal purposes (informing residents, increasing access to a service that benefits public welfare, etc.).

For Mississippi mayors and city council members

Decisions to license city branding to private companies should pass three tests:

1. Is the activity a proper government purpose? The licensing has to serve a municipal goal beyond raising money.

2. Is the city engaging in private enterprise? If the city is essentially partnering with a private company to share in the company's profits, that is private enterprise.

3. Is the city endorsing the company? An endorsement risks public confusion (residents think the city has vetted the company) and goes beyond the city's authority.

If any of these tests is doubtful, the safer path is to not license. The licensing revenue is not worth the litigation risk and the political risk if a competitor files a complaint.

For private companies considering municipal-branding partnerships

Be prepared for the city to walk away or to materially restructure your proposal. A typical company proposal (per-sign-up fee, marketing using the city's name and logo) hits multiple AG-flagged issues. To make the deal more workable:

• Offer a flat license fee tied to scope (volume of marketing materials, time period), not to outcomes
• Build in clear disclaimers that distance the city from endorsement
• Tie the partnership to a public-service function the city has an interest in promoting
• Be willing to make the license non-exclusive so the city can offer similar arrangements to competitors

For economic development directors

This opinion sets the structural framework for branding-license partnerships. Use it as a checklist when reviewing proposals from private partners. If a partnership cannot pass the proper-purpose, no-private-enterprise, no-endorsement tests, send the partner back to revise.

For municipal finance officers

Track and account for any branding-license revenue separately. The AG's opinions emphasize that funds received from authorized use must be "properly accounted for and spent according to the law." Treat license fees as general fund revenue with documented public-purpose use, not as a special revenue stream tied to the partner's business.

Common questions

Q: Can the city license its logo to a non-profit?
A: The same analysis applies. Even non-profits trigger the proper-purpose test if the partnership essentially endorses the non-profit's fundraising. Structure license carefully.

Q: What about co-branding for events (sponsor logos at city events)?
A: This is a separate analysis. Sponsor recognition at city events generally is allowed within reasonable limits, especially if the sponsorship is for a city-run event. The 2014 Shepard sheriff's-calendar opinion is the cautionary one: paid advertising on city assets in exchange for revenue raises the profit-making concern.

Q: Can the city run an official "city seal" merchandise program?
A: This is a different question. Selling merchandise (T-shirts, mugs) bearing the city seal could be a profit-making venture. The Shepard 1991 opinion said manufacturing and selling Christmas ornaments was not authorized.

Q: What about the city's name on a private golf course or stadium?
A: Naming-rights deals require careful structuring. If the city is paying for the naming rights, that is one transaction; if the city is being paid to lend its name to a private facility, that is closer to the Hattiesburg scenario and faces the same constraints.

Q: Can the city accept donations from private companies to support city services?
A: Yes. Donations that do not require quid pro quo from the city are different from licensing arrangements. The 2013 Ringer opinion confirmed this.

Q: What if the company wants to use the city's social media to market its services?
A: Same analysis. The city's social media is a city asset; using it to market a private company is potentially endorsement. Cities should have clear policies about what private content can be promoted on city accounts.

Q: What is the difference between a license and an endorsement?
A: A license is permission to use a mark with possibly limited promotional language. An endorsement is the licensor's affirmative vouching for the licensee's business. The line can be blurry, especially if the marketing materials say things like "Brought to you by the City of [X]" or "In partnership with [X]."

Q: Can the city's police or fire department use its image in a private company's advertisement?
A: The same restriction applies, with additional concern about implying that public-safety services are tied to private products. The Doty 1994 opinion (firefighter unlocking cars for fees) is a foundational no-private-business case.

Q: What if the private company is providing a service the city wants residents to use (e.g., trash collection)?
A: A service relationship is different. If the city contracts with a vendor for a service, the vendor uses the city's name in the contract context routinely. That is a service contract, not a branding license. Structure as a service contract.

Q: How does a council make the factual determination about endorsement vs. license?
A: Look at the actual marketing materials. If they read like the company is selling its product with city approval, that is endorsement. If they read like a neutral information piece (the city has authorized the company to use this logo), that is closer to a license. Have city counsel review the materials before approval.

Background and statutory framework

Mississippi's Home Rule statute (Section 21-17-5) gives municipalities broad authority over municipal affairs. The statute is generous, but it has long-standing limits articulated in AG opinions and case law.

The proper-government-purpose limit traces to Section 21-17-1 and Mississippi Supreme Court precedent. Cities exist to serve municipal functions: public safety, public works, parks and recreation, etc. Activities that are not municipal in nature fall outside the city's authority.

The profit-making-venture limit is a corollary. If a city is essentially in business for profit, that is private enterprise. The opinions cited (Mallette 2012, Holmes-Hines 2012, Murdock 2019, Odom 1997, Doty 1994, Shepard 1991, Allen 1990) describe this constraint across various contexts: equipment rental, calendar sales, vehicle unlocking services, ornament manufacturing.

The endorsement limit is more recent and less litigated. The 2021 PopeIII opinion is a clear statement that endorsement is not within the proper-government-purpose authority absent specific legislative authorization.

The AG's hedge is the donation pathway. A for-profit company can make a donation to the city, and the city can accept. But the structure has to be a true donation, not a disguised payment for services. The 2013 Ringer opinion drew that line.

The factual-determination framing reflects the AG's institutional limits. Whether a particular arrangement is a license or an endorsement, a flat-fee arrangement or a profit share, depends on the specific terms. The council has to assess and document.

Citations and references

Statutes:
- Miss. Code Ann. § 21-17-1, municipal authority limited to proper municipal purposes
- Miss. Code Ann. § 21-17-5, Home Rule statute

Prior AG opinions cited:
- MS AG Op., Allen (Aug. 15, 1990), rental of municipal personal property is commercial in nature, not proper municipal activity
- MS AG Op., Doty (Jan. 12, 1994), municipal fireman cannot unlock vehicles for fee; not proper governmental purpose
- MS AG Op., Holmes-Hines (June 15, 2012), municipality cannot engage in private business enterprise without legislative authorization
- MS AG Op., Logan (June 21, 2013), public entity can receive funds for authorized use of its logo or marks
- MS AG Op., Mallette (May 1, 2012), municipalities cannot engage in profit-making ventures
- MS AG Op., Murdock (Sept. 20, 2019), profit-making venture prohibition
- MS AG Op., Odom (Aug. 15, 1997), municipality cannot rent equipment to individuals as profit-making venture
- MS AG Op., Poole and Arentson (Apr. 17, 2015), authority of public entities to license intellectual property
- MS AG Op., Ringer (Nov. 8, 2013), municipality may accept donations from for-profit organizations
- MS AG Op., Russell (July 18, 2014), municipal endeavors may not result in profit
- MS AG Op., Shepard (Dec. 18, 1991), Christmas ornament manufacture and sale is unauthorized business venture
- MS AG Op., Shepard (Sept. 19, 2014), sheriff's office cannot allow company to identify it on calendar in return for proceeds; appears to be profit-making venture

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2021/12/M.PopeIII-November-29-2021-Private-Company-Using-Citys-Branding-and-or-Logo.pdf

Original opinion text

November 29, 2021

Moran M. Pope, III, Esq.
Attorney for City of Hattiesburg
Post Office Box 17527
Hattiesburg, Mississippi 39404-7527

Re: Private Company Using City's Branding and/or Logo

Dear Mr. Pope:

The Office of the Attorney General has received your request for an official opinion.

Background

The City of Hattiesburg (the "City") has been approached by a private company seeking to enter into a non-exclusive agreement with the City that would grant the company the right to use the City's branding on marketing and advertising materials sent by the company to property owners in the City. The cost of the marketing and advertising materials would be covered solely by the company leaving no cost to the City. According to your request, the City would essentially be entering into an agreement to endorse the company and would be paid an annual license fee for each property owner who signs up for the company's services.

Question Presented

May the City enter into a non-exclusive agreement whereby the City would allow a private company to use the City's branding on the company's advertisements, in return for payment by the company?

Brief Response

A municipality may enter into a non-exclusive agreement that allows a private company to use its branding marks and then receive payment for that authorized use. However, a municipality may only engage in activities that constitute proper government purposes and may not engage in private enterprise.

Applicable Law and Discussion

The municipal "Home Rule" statute grants broad authority to municipalities in adopting any orders, resolutions, or ordinances with respect to municipal affairs, property and finances that are not otherwise inconsistent with any other laws. Miss. Code Ann. § 21-17-5(1). However, "it is fundamental that cities may only engage in activities that constitute proper government purposes and may not engage in private enterprise." MS AG Op., Doty at *1 (Jan. 12, 1994) (citing Miss. Code Ann. § 21-17-1).

In previous opinions, we have noted the authority of public entities to license intellectual property. MS AG Op., Poole and Arentson at 1 (Apr. 17, 2015). We have further opined that a public entity is authorized to receive funds in exchange for the authorized use of its logo or marks so long as the funds received were properly accounted for and spent according to the law. MS AG Op., Logan at 1 (June 21, 2013). Upon review of the authority granted to municipalities by the Legislature, we similarly opine that pursuant to the municipal Home Rule statute, a municipality may enter into a non-exclusive agreement that allows a private company to use its branding marks and then receive payment for that authorized use. We note that any agreement into which the City enters must comply with all laws governing municipal contracts, and any funds received as a result should be properly accounted for and expended pursuant to all laws governing the expenditure of public funds.

According to your request, "the City would be paid an annual license fee for each property owner who signs up for the company's services." This office has repeatedly opined that municipalities may not engage in profit-making ventures or in private enterprise. MS AG Op., Mallette (May 1, 2012); MS AG Op., Murdock at 1 (Sept. 20, 2019); see also MS AG Op., Holmes-Hines (June 15, 2012) (finding municipality may not engage in private business enterprise unless granted authority by Legislature); MS AG Op., Odom (Aug. 15, 1997) (finding no authority for municipality to rent equipment to individuals in private sector as profit-making venture); MS AG Op., Doty (Jan. 12, 1994) (finding municipal fireman may not unlock vehicles for a fee as such is not a proper governmental purpose and would constitute a private business venture); MS AG Op., Shepard (Dec. 18, 1991) (finding manufacture and sale of Christmas ornaments is a business venture and is unauthorized); MS AG Op., Allen (Aug. 15, 1990) (finding rental of municipal personal property is of a commercial nature and not a proper governmental activity). In this context, we have said that an endeavor undertaken by a municipality "may not result in a profit." MS AG Op., Russell at 1 (July 18, 2014).

We have also opined that a sheriff's department could not, among other things, allow a company to identify the sheriff's office on a calendar "in return for the company agreeing to pay a percentage of the proceeds from sales of advertisements" on the basis that "such an arrangement appears to be undertaken solely as a profit making venture." MS AG Op., Shepard at 1 (Sept. 19, 2014). Whether the arrangement described in your request constitutes a profit-making venture requires a factual determination that must be made by the City. Notably, however, we have opined that "there is nothing that would prohibit [a] municipality from accepting any 'profits' offered to it in the form of a donation made by the for-profit organization." MS AG Op., Ringer at 1 (Nov. 8, 2013).

As an additional matter, your request suggests that the City's proposed arrangement with the company would constitute the City's endorsement of such company. We find no authority suggesting that a municipality endorsing a private company constitutes a proper government purpose for municipalities under Section 21-17-1. However, whether the City's actions described in your request constitute an "endorsement" is a factual determination that must be made by the City Council.

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,

LYNN FITCH, ATTORNEY GENERAL

By: /s/ Abby Overby
Abby Overby
Special Assistant Attorney General