What is the All Team franchisee's obligation regarding defending the collateral against claims?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE agrees to promptly notify ATFC of any claim, demand, or suit based upon or arising from any attempt by anyone else to use the Marks, any challenge to the validity of the Marks or any challenge to the ownership by ATFC of the Marks, or FRANCHISEE's right to use the Marks. ATFC shall have the sole discretion to take such actions as it deems appropriate and the right to exclusively control any litigation, U.S. Patent and Trademark Office proceeding, or other administrative proceeding arising out of any such apparent infringement, challenge or claim or otherwise relating to any Mark including settlement thereof. FRANCHISEE shall execute any and all instruments and documents, render such assistance and do such acts and things as may, in the opinion of ATFC's, be necessary or advisable to protect and maintain the interest of ATFC in such litigation, U.S. Patent and Trademark Office proceeding or other administrative proceeding and to otherwise protect and maintain the interests of ATFC in the Marks. Notwithstanding anything herein to the contrary, ATFC will not be required to defend FRANCHISEE against such claim or challenge if said claim or challenge arises out of FRANCHISEE's unauthorized use or misuse of the Marks.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the franchisee has specific obligations regarding claims against the brand's trademarks. The franchisee must promptly inform All Team of any claim, demand, or suit arising from the unauthorized use of the All Team marks, challenges to the validity of the marks, or challenges to All Team's ownership of the marks, or the franchisee's right to use them.
All Team retains the sole discretion to take actions it deems appropriate, including controlling any litigation or administrative proceedings related to infringement, challenges, or claims concerning the marks. This includes the right to settle such matters. The franchisee is required to assist All Team by executing necessary documents and providing assistance to protect All Team's interests in these legal matters.
However, All Team is not obligated to defend the franchisee if the claim or challenge arises from the franchisee's unauthorized use or misuse of the marks. This clarifies that franchisees are responsible for their own actions if they misuse the All Team trademarks. This is a fairly standard clause in franchise agreements, as franchisors need to protect their brand and ensure consistent usage of their trademarks, while franchisees must adhere to brand standards and avoid unauthorized use to maintain the integrity of the brand and avoid legal issues.