If Alloy undertakes the defense of an infringement claim, who bears the direct costs of the Developer's cooperation?

According to Alloy's 2025 Franchise Disclosure Document, for franchises sold in Minnesota, Alloy will bear the direct costs of the Developer's cooperation if Alloy undertakes the defense of any claim of infringement by third parties involving the ALLOY Mark. This is specified in an addendum to the franchise agreement that pertains to franchises sold in the State of Minnesota, aligning with Minnesota statutes and regulations.

Specifically, the FDD states that the Developer (franchisee) will cooperate with the defense in any reasonable manner prescribed by Alloy. This means that if a third party claims that the franchisee's use of the ALLOY Mark infringes on their rights, Alloy will handle the legal defense, and the franchisee is expected to assist in this defense as reasonably requested by Alloy.

This arrangement is beneficial for prospective Alloy franchisees in Minnesota, as it protects them from incurring direct costs associated with defending against trademark infringement claims. Outside of Minnesota, the FDD does not specify who bears the direct costs of cooperation. Therefore, prospective franchisees outside of Minnesota should seek clarification from Alloy regarding the allocation of these costs in the event of an infringement claim.