The Brabham family are considering taking legal action against the company that last week lodged an entry to compete in Formula One from next season under the famous name.

German businessman Franz Hilmer, who runs Formtech, announced that Brabham Grand Prix were hoping to gain one of the three new spots on the grid for 2010.

Hilmer, who bought the assets of the defunct Super Aguri outfit last year, has tied up with former staff from the Leafield-based outfit.

In a statement it was confirmed that Hilmer plans to run under cost cap regulations next year.

"The Brabham Grand Prix team has the pleasure to announce its application as a 'Cost Cap Formula 1 Team' for the FIA 2010 Formula 1 World Championship," explained the statement.

"We appreciate the FIA rules for cost capped F1 teams and are convinced that the budget limitation is a contemporary obligation, and will effect a revitalisation of the Formula 1 World Championship.

"We would be happy to enter into Formula 1 as a Cost Cap Team and to meet the challenge under the new rules."

The team's technical director will be Mark Preston, who had a similar role for Super Aguri. The outfit will also be based at the team's former Leafield headquarters.

Hilmer is understood to have bought the rights to the name of one of the most prestigious F1 marques that in 30 years of grand prix racing from 1962 to 1992 won two drivers' and four constructors' titles.

However, the family of three-time world champion Sir Jack Brabham - the oldest surviving F1 title-holder at the age of 83 - are now weighing up their options.

A statement from Brabham Enterprises Limited read: "Sir Jack Brabham and the Brabham family have expressed their surprise at the recent news reporting that an entry has been submitted for the 2010 FIA Formula One World Championship by Formtech with the intention of operating as Brabham Grand Prix Limited.

"The family would like to make it clear they are in no way involved with Brabham Grand Prix Limited and received no consultation regarding the company's plans to resurrect their historic name in Formula One.

"The family are taking legal advice and will take necessary steps to protect their name, reputation and their goodwill."