In the event of a third-party claim of infringement involving the ALLOY Mark, who is responsible for undertaking the defense?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
This Addendum pertains to franchises sold in the State of Minnesota and is for the purpose of complying with Minnesota statutes and regulations. Notwithstanding anything which may be contained in the body of the Area Development Agreement to the contrary, the Agreement is amended as follows:
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- Franchisor will undertake the defense of any claim of infringement by third parties involving the ALLOY Mark and Developer will cooperate with the defense in any reasonable manner prescribed by Franchisor with any direct cost of such cooperation to be borne by Franchisor.
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- Minnesota law provides franchisees with certain termination and nonrenewal rights. As of the date of this Area Development Agreement, Minn. Stat. Sec. 80C.14, Subd. 3, 4 and 5 require, except in certain specified cases, that a franchisee be given 90 days notice of termination (with 60 days to cure) and 180 days notice for nonrenewal of the Area Development Agreement.
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- Nothing in the Area Development Agreement can abrogate or reduce any of Developer's rights as provided for in Minnesota Statutes, Chapter 80C, or Developer's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction. In addition, Minn. Stat.§ 80C.21 and Minn. rule 2860.4400J prohibit Franchisor from requiring litigation to be conducted outside Minnesota.
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- Minnesota Rule 2860.4400D prohibits Franchisors from requiring franchisees to assent to a general release. The Area Development Agreement is modified accordingly, to the extent required by Minnesota law.
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- The following sentence is hereby added to the end of Section 3.A, Development Fee:
Due to the financial condition of the Franchisor, the Minnesota Department of Commerce has required a financial assurance. Therefore, we have posted a surety bond which is on file with the State of Minnesota. A copy of the surety bond is attached as an exhibit to the Minnesota addenda pages.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the responsibility for defending against third-party claims of infringement involving the ALLOY Mark depends on whether the franchisee used the trademarks in accordance with the franchise agreement. Generally, Alloy or its affiliate has the sole right to direct and control any administrative proceeding or litigation involving the trademarks, including any settlement. Alloy also has the right, but not the obligation, to take action against uses by others that may constitute infringement of the trademarks and may defend the franchisee against any third-party claim arising out of the franchisee's use of the trademarks.
If Alloy or its affiliate determines that the franchisee used the trademarks in accordance with the agreement, Alloy or its affiliate will bear the cost of the defense, including any judgment or settlement costs. However, if Alloy or its affiliate determines that the franchisee did not use the trademarks in accordance with the agreement, the franchisee will be responsible for the cost of the defense, including any judgment or settlement.
For franchisees in Minnesota, the FDD includes an addendum that states Alloy will undertake the defense of any claim of infringement by third parties involving the ALLOY Mark. The franchisee will cooperate with the defense in any reasonable manner prescribed by Alloy, with any direct cost of such cooperation to be borne by Alloy. This addendum modifies the general terms of the agreement for Minnesota franchisees to comply with Minnesota statutes and regulations, specifically regarding trademark infringement claims.