What is the franchisee's obligation to Afuri Ramen Dumpling if they are involved in litigation regarding the Afuri Ramen Dumpling trademarks?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
You will immediately notify us of any infringement of, or challenge to, your use of the Marks or any marks identical to or confusingly similar to the Marks, including any claims of infringement or unfair competition. While we will make reasonable efforts to protect your rights to use the Marks, we will have sole discretion to take or not to take action, as we deem appropriate. We will not be required to participate in your defense or indemnify you for expenses or damages if you are a party to an administrative or judicial proceeding involving the Marks or if the proceeding is resolved unfavorably to you. If we undertake the defense or prosecution of any litigation or administrative action involving you or any litigation or administrative action involving the Marks, you agree to execute any and all documents and to do all acts and things that in the opinion of our counsel are necessary or advisable to carry out the defense or prosecution. This may be done either in our name or in your name, as we will elect.
Source: Item 13 — Trademarks (FDD pages 37–39)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, franchisees must immediately inform Afuri Ramen Dumpling of any infringement or challenges to the use of the trademarks, including claims of infringement or unfair competition. While Afuri Ramen Dumpling will make reasonable efforts to protect the franchisee's rights to use the marks, they have sole discretion to take or not take action.
Afuri Ramen Dumpling is not obligated to participate in the franchisee's defense or cover expenses or damages if the franchisee is involved in an administrative or judicial proceeding concerning the trademarks, especially if the outcome is unfavorable to the franchisee. However, if Afuri Ramen Dumpling decides to undertake the defense or prosecution of any litigation or administrative action involving the franchisee or the trademarks, the franchisee must execute all necessary documents and actions as deemed necessary by Afuri Ramen Dumpling's counsel. This may be done in Afuri Ramen Dumpling's name or the franchisee's name, as Afuri Ramen Dumpling chooses.
This means that while Afuri Ramen Dumpling retains control over trademark-related legal actions, franchisees bear the risk of incurring expenses if they are a party to such proceedings and the outcome is not in their favor. Franchisees must cooperate fully with Afuri Ramen Dumpling in any legal actions the company chooses to pursue. This is a fairly standard arrangement in franchising, as franchisors typically want to control the defense of their trademarks, but it places the financial burden on the franchisee if they are directly involved and lose the case.