Top-level domains may pose serious costs to franchise businesses

A recent story in The Wall Street Journal, “The Race to Nab Web Addresses” highlights the potentially lucrative opportunities many entrepreneurs believe exists in securing top-level domain names when they become available for the first time in years on Jan. 12. While there may be opportunities for some, there are significant costs and ramifications for franchise businesses. 

The non-profit organizations that manages the internet domain-name process, Internet Corporation for Assigned Names and Numbers (ICANN), decided to move ahead with its plans to expand the number of generic top-level domains, despite the opposition of the IFA and many other business groups across the globe.

ICANN will open the application window for new top-level domains as planned on January 12. The top-level domain names appear to the right of the “dot” in internet addresses, for instance the .com or .gov. ICANN’s decision to move forward will likely create thousands of new top-level domain names compared to the twenty-two in use today.

The Department of Commerce on January 3rd wrote to ICANN citing “tremendous concerns’ by industry leaders about the “unintended and unforeseen consequences” of expanding the list so dramatically, and asked for time to better educate business and consumers about the application process and its possible negative effects.

IFA, as members of the Coalition for Responsible Internet Domain Oversight, joined over 160 business groups in urging Congress and the Department of Commerce to intervene and move the program’s start date. As part of the coalition, IFA met with the Commerce Department and congressional leaders to relay the effects the new process will have on its members, potentially costing millions of dollars as they are forced to register multiple new domains to protect their trademarks and brands. IFA joined these groups to petition the Commerce Department to postpone the opening of the top-level domain application window unless or until such time as ICANN convincingly demonstrates that unlimited TLD name expansion would:

  • Promote consumer trust;
  • Enhance Internet security;
  • Promote widespread economic benefits across diverse economic sectors and stakeholders; and
  • Demonstrate that these benefits will exceed the costs that such gTLD expansion would inevitably impose on the global Internet community.

The initial fee for one new top-level domain is $185,000 not including internal costs. The process to register for a new domain name will close on March 29, 2012 and ICANN is not set to release the approved top-level domains until 2013.

For more information concerning ICANN and top-level domain names please contact Jay Perron, JPerron@Franchise.org.

Posted by Jay Perron, IFA Vice President for Government Relations & Public Policy