Does the Aplus indemnification for trademark disputes cover the franchisee's expense of removing signage or discontinuing the use of the Marks?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor shall reimburse Franchisee for all expenses reasonably incurred by Franchisee in any trademark or similar proceeding disputing Franchisee's authorized use of any Mark, provided that Franchisee has complied with the provisions of Section 6.3 and has complied with this Agreement and Franchisor's directions in responding to such proceeding. At Franchisor's sole discretion and option, Franchisor or its designee may defend and control the defense of any proceeding arising directly from Franchisee's use of any Mark. This indemnification shall not include the expense to Franchisee of removing signage or discontinuance of the use of the Marks. This indemnification shall not apply to litigation between Franchisor and Franchisee wherein Franchisee's use of the Marks is disputed or challenged by Franchisor. This indemnification shall not apply to any separate legal fees or costs incurred by Franchisee in seeking independent counsel separate from the counsel representing Franchisor and Franchisee in the event of litigation disputing Franchisor and Franchisee's use of the Marks.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to the 2024 Aplus Franchise Disclosure Document, the indemnification provided to franchisees for trademark disputes does not cover the expenses associated with removing signage or discontinuing the use of the Marks. Specifically, while Aplus will reimburse franchisees for expenses reasonably incurred in trademark proceedings related to the authorized use of Aplus Marks, this reimbursement explicitly excludes the costs of removing signage or discontinuing the use of the Marks.
This means that if a trademark dispute arises and Aplus directs a franchisee to remove or modify signage bearing the Aplus Marks, the franchisee will be responsible for covering these expenses themselves. This could include costs for new signage, labor for removal and installation, and any associated losses due to business disruption.
Furthermore, if Aplus deems it necessary for a franchisee to modify or discontinue the use of any Marks, the franchisee must comply within ten business days of notice from Aplus. Aplus is not required to reimburse the franchisee for these modifications or discontinuance expenses, nor for any loss of goodwill or expenditures related to promoting a modified or substitute Mark. This could potentially create a financial burden for franchisees if they are required to make significant changes to their branding or signage at their own cost. Franchisees should factor in these potential costs when assessing the overall financial implications of the franchise agreement.