Is 360 Painting obligated to reimburse a franchisee for any loss of goodwill associated with a modified or discontinued Mark?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
We can require you to modify or discontinue the use of any Mark and to use other trademarks or service marks. We will not be required to reimburse you for modifying or discontinuing the use of a Mark or for substituting another trademark or service mark for a discontinued Mark. We are not obligated to reimburse you for any loss of goodwill associated with a modified or discontinued Mark.
We will reimburse you for all of your expenses reasonably incurred in any legal proceeding disputing your authorized use of any Mark, but only if you notify us of the proceeding in a timely manner and you have complied with our directions with regard to that proceeding. We have the right to control the defense and settlement of that proceeding. Our reimbursement does not include your expenses for removing signage or discontinuing your use of any Mark. Our reimbursement also does not apply to any disputes where we challenge your use of a Mark. Our reimbursement does not apply to legal fees you incur in seeking separate, independent legal counsel.
Source: Item 13 — TRADEMARKS (FDD pages 39–41)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, 360 Painting is not obligated to reimburse a franchisee for any loss of goodwill associated with a modified or discontinued mark. 360 Painting retains the right to require franchisees to modify or discontinue the use of any mark and to use other trademarks or service marks.
This means that a 360 Painting franchisee may be required to change the branding of their business, and 360 Painting will not provide compensation for any resulting loss of customer recognition or business reputation. This could potentially impact the franchisee's revenue and profitability if customers no longer recognize the business or associate it with the same quality of service.
While 360 Painting will not cover losses of goodwill, they will reimburse a franchisee for expenses reasonably incurred in a legal proceeding disputing the authorized use of any mark, provided the franchisee notifies 360 Painting in a timely manner and complies with their directions regarding the proceeding. However, this reimbursement does not extend to expenses for removing signage or discontinuing the use of any mark, nor does it apply to disputes where 360 Painting challenges the franchisee's use of a mark or legal fees incurred seeking independent counsel.
Prospective franchisees should carefully consider the potential financial implications of a required brand change and the lack of compensation for lost goodwill. It would be prudent to inquire about the likelihood of future brand modifications and the factors that would trigger such changes.