In the event of a third-party claim of trademark infringement involving the ALLOY Trademark, what role does Alloy require the franchisee to play in the defense?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
use is under a license we have issued to you. All your internal and external signs must comply at all times with our outdoor/indoor guidelines and practices, as they are modified from time to time.
- D. Litigation. In the event any person or entity improperly uses or infringes the Trademarks or challenges your use or our use or ownership of the Trademarks, you must promptly notify us of any such use or infringement of which you are aware or any challenge or claim arising out of your use of any Trademark. We or our Affiliate have the sole right to direct and control any administrative proceeding or litigation involving the Trademarks, including any settlement. We or our Affiliate have the right, but not the obligation, to take action against uses by others that may constitute infringement of the Trademarks. We or our Affiliate may defend you against any thirdparty claim, suit or demand arising out of your use of the Trademarks. If we or our Affiliate determine that you have used the Trademarks in accordance with this Agreement, the cost of the defense, including the cost of any judgment or settlement, will be borne by us or our Affiliate. If we or our Affiliate determine that you have not used the Trademarks in accordance with this Agreement, the cost of the defense, including the cost of any judgment or settlement, will be yours. In the event of any litigation relating to your use of the Trademarks, you must sign any and all documents and do the acts as may, in our opinion, be necessary to carry out the defense or prosecution, including becoming a nominal party to any legal action, and we or our Affiliate will reimburse you for your out-of-pocket costs in doing these acts except if this litigation is the result of your use of the Trademarks in a manner inconsistent with the terms of this Agreement.
- E. Changes. You may not make any changes or substitutions to the Trademarks unless we direct in writing. We reserve the right to change or modify the Trademarks, including the ALLOY Trademark, at any time. For example, we may require you to cease all use of the ALLOY Trademark at any time and require you to use a different Trademark as we may designate in connection with the operation and identification of your Facility.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, if a third party claims trademark infringement, Alloy franchisees must promptly inform Alloy of any such claim or infringement they are aware of. Alloy retains the sole right to manage and control any administrative or legal proceedings related to the trademarks, including settlements. Alloy also has the right, but not the obligation, to take action against others who may be infringing on the trademarks. Alloy may choose to defend the franchisee against any third-party claim arising from the franchisee's use of the trademarks.
If Alloy determines that the franchisee has used the trademarks according to the franchise agreement, Alloy or its affiliate will cover the costs of the defense, including any judgments or settlements. However, if Alloy determines that the franchisee has not used the trademarks in accordance with the agreement, the franchisee will be responsible for all defense costs, including judgments or settlements.
In any litigation related to the use of Alloy's trademarks, franchisees must sign all necessary documents and perform all actions that Alloy deems necessary for the defense or prosecution. This includes becoming a nominal party to any legal action. Alloy or its affiliate will reimburse the franchisee for out-of-pocket costs incurred while performing these actions, unless the litigation results from the franchisee's use of the trademarks in a manner inconsistent with the terms of the agreement. For franchisees in Minnesota, Alloy will undertake the defense of any claim of infringement by third parties involving the ALLOY Trademark, and 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.