If Alloy undertakes the defense of an infringement claim in Minnesota, who bears the direct costs of the Developer's cooperation?
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.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, specifically the addendum for Minnesota franchises, Alloy will bear the direct costs of the Developer's cooperation in defending against infringement claims. This addendum modifies the standard Area Development Agreement to comply with Minnesota statutes and regulations. This means that if a third party claims that the Alloy Mark is being infringed upon, and Alloy decides to defend against that claim, Alloy will cover the direct costs incurred by the Developer for their cooperation in the defense.
This provision is beneficial for prospective Alloy developers in Minnesota, as it reduces their financial risk in the event of a trademark dispute. Trademark litigation can be expensive, and this clause ensures that the developer will not have to pay out-of-pocket for costs directly related to assisting Alloy in defending the trademark. This could include costs such as travel, document preparation, or legal consultation specifically requested by Alloy for the defense.
It is important to note that this protection applies specifically to 'direct costs of such cooperation.' It would be prudent for a prospective franchisee to clarify with Alloy what constitutes a 'direct cost' and to understand the process for documenting and seeking reimbursement for these expenses. This addendum serves to protect the franchisee and is a condition of offering franchises in Minnesota.