Can an Angry Chickz franchisee settle an infringement claim without the company's consent?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
11.4.1 If Franchisee receives notice, or is otherwise informed, of any claim, suit or demand against Franchisee of any alleged infringement, unfair competition or similar matter on account of its use of the Marks or trade dress, Franchisee shall promptly notify Company of the same. Company shall take such action as it may deem necessary and appropriate to protect and defend Franchisee against any such claim, but Company shall not be obligated to take any such action, however. Franchisee shall not settle or compromise any claim by a third party without the prior written consent of Company. Company shall have the sole right to defend, compromise or settle any claim, in its discretion, at Company's sole cost and expense, using attorneys of its own choosing.
- 11.4.2 If Franchisee receives notice or learns that any unauthorized third party is using Company's trade dress or Marks or something similar, Franchisee shall promptly notify Company.
Company shall then determine whether or not it wishes to take any action against such third person.
Franchisee shall have no right to make any demand against any alleged infringer or to prosecute any claim of any kind or nature whatsoever against any alleged infringer for or on account of such infringement.
- 11.4.3 Franchisee agrees to sign any documents and take any other reasonable actions that, in the opinion of Company's or its licensor's attorneys, are necessary or advisable to protect and maintain Company's (and its licensor's) interests in any litigation or Patent and Trademark office or other proceeding or otherwise to protect and maintain Company's (and its licensor's) interest in the Marks.
Franchisee may participate at its own expense in such defense or settlement, but Company's decisions with regard to the disposition of a claim shall be final.
Franchisee agrees not to communicate with any person or Entity other than Company and its licensor, their respective attorneys, and Franchisee's attorneys regarding any infringement, challenge or claim.
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to Angry Chickz's 2025 Franchise Disclosure Document, a franchisee cannot settle any claim regarding infringement, unfair competition, or similar matters related to the use of Angry Chickz's marks or trade dress without the prior written consent of the company. Angry Chickz retains the sole right to defend, compromise, or settle any such claim at its discretion, using attorneys of its choosing and at its own cost and expense.
This means that if an Angry Chickz franchisee faces a legal claim related to the brand's trademarks or trade dress, they must immediately notify Angry Chickz. The franchisee cannot independently resolve the issue. This protects the brand's image and legal position, ensuring consistent handling of such matters.
This requirement is typical in franchising, as franchisors need to control their brand's legal defense. While the franchisee may participate in the defense or settlement at their own expense, Angry Chickz's decisions regarding the claim's disposition are final. The franchisee also agrees not to communicate with any person or entity other than Angry Chickz and its licensor, their respective attorneys, and the franchisee's attorneys regarding any infringement, challenge, or claim.
This provision ensures that Angry Chickz maintains control over its brand and legal strategy, while also protecting the franchisee from potential legal missteps. However, it also means that franchisees have limited autonomy in these situations and must rely on Angry Chickz's expertise and decisions.