Naming your company after a town can help customers locate your business if it's located in that town. It can also help to build a brand identity. For example, naming your company after a small town could evoke memories of a simpler time and convey a strong customer service focus. While naming your company after a town is not always illegal, doing so when the town name is trademarked or your company is controversial could land you in legal trouble.

General Legalities

No laws prohibit businesses from naming their companies after a town, and this is a common business strategy. You might, for example, name your Atlanta-based tire shop Atlanta Tires, or your New York-based apple stand New York Apples. However, you cannot imply that the city or town has endorsed your product by saying, for example, "We're the city council's favorite restaurant." This is a form of false advertising, which is a civil offense.

Trademark Issues

You can name your business just about anything you want, so long as the name isn't already trademarked. Because many businesses name their companies after the town in which the business is located, you'll need to ensure that someone else hasn't already trademarked the same name. Sometimes, cities trademark their own names, and if the city name is trademarked, you won't be able to use it. After you register your company name, you might want to trademark it, but you won't own the trademark to the city's name and can't prohibit the city from using the name.

Controversial Businesses

If you run a controversial company, such as a strip club or a tabloid, using a city's name could be a dangerous strategy. While there's no law prohibiting such a practice, the city might try to stop you, particularly if your name in any way makes fun of the city. It could, for example, claim that associating the city's name with your business is a form of defamation. Even if the city doesn't win a lawsuit, being sued can be a costly and exhausting experience.

Other Considerations

If you want to only use the city's name, rather than use it as a descriptor, finding your business could be challenging for your customers. Naming a medical practice Atlanta, for example, tells potential customers nothing about your actual business and won't help you in online search-engine results. Conversely, naming your business after a suburb -- rather than the city it surrounds -- could draw in more customers who are looking for a business close to them if you use the suburb as a descriptor in the name.