Does Aplus have the right to control settlement proceedings involving the Marks or Copyrighted Works?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
er or not such social media platform is used for commercial gain).
You must promptly notify us of any suspected unauthorized use of, or any challenge to the validity of the Marks or Copyrighted Works, or any challenge to our ownership of, or license to use and to license others to use, or your right to use, the Marks or Copyrighted Works. We have the right to direct and control any administrative proceeding or litigation or other adjudicative proceeding involving the Marks or Copyrighted Works, including any settlement of the proceeding. We or our affiliate has the right, but is not obligated, to take action against uses by others that may constitute infringement of the Marks or Copyrighted Works. We will defend you against any third-party claim, suit, or demand arising out of your use of the Marks or Copyrighted Works. If we determine that you have used the Marks and Copyrighted Works according to the terms of the franchise agreement, we will pay the cost of the defense, including the cost of any judgment or settlement. If we determine that you have not used the Marks and Copyrighted Works according to the terms of the franchise agreement, you must pay the cost of the defense, including the cost of any judgment or settlement. If there is any litigation regarding your use of the Marks or Copyrighted Works, you must sign all documents that we require and do all things that we consider necessary to carry out the defense or prosecution, which may include becoming a nominal party to any legal action. Unless the action is the result of your use of the Marks or Copyrighted Marks in a manner inconsistent with the terms of the franchise agreement, we will reimburse you for your out-of-pocket litigation costs in doing such acts.
You and your employees must maintain the confidentiality of all information contained in the Systems Manual and other information that we consider confidential, proprietary or trade secret information. "Confidential Information" means all trade secrets, the Standards, and other elements of the System; all customer information; all information contained in the Systems Manuals; our proprietary recipes and standards and specifications for product preparation, packaging and service; financial information; marketing data; vendor and supplier information; all other knowledge, trade secrets, or know-how concerning the methods of operation of the APLUS Store which may be communicated to you, or of which you may be apprised, by virtue of their operation under the terms of the Franchise Agreement, and all other information that we designate.
ITEM 15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS
You must either operate the APLUS Store as a sole proprietor or in a form of business organization approved by us. In addition, prior to entering into the Franchise Agreement, you are required to show proof satisfactory to us of your United States citizenship or permanent residency status.
We require that you be directly involved in the operation of your APLUS Store, devoting good faith and best efforts to the daily operation the APLUS Store. Your "Designated Manager" is the individual designated by Franchisee as having primary responsibility for managing the day-to-day supervision and affairs of the APLUS Store. If you operate the APLUS Store as a sole proprietor, then you shall also be the Designated Manager.
Source: Item 14 — PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION (FDD pages 50–51)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, Aplus retains the right to direct and control any legal proceedings involving its Marks or Copyrighted Works, including settlements. This means that as a franchisee, you must promptly inform Aplus of any suspected unauthorized use or challenges to the Marks or Copyrighted Works. Aplus, not the franchisee, has the authority to manage any administrative, litigation, or adjudicative proceedings related to these intellectual properties.
This control extends to any settlement negotiations, giving Aplus the final say in resolving disputes. While Aplus has the right to take action against infringements, it is not obligated to do so. However, Aplus will defend the franchisee against third-party claims arising from the use of the Marks or Copyrighted Works, provided the franchisee has adhered to the terms of the franchise agreement. If the franchisee's use of the Marks and Copyrighted Works is not in accordance with the agreement, the franchisee will bear the cost of the defense, including any judgments or settlements.
The FDD also states that franchisees must sign all necessary documents and take actions deemed necessary by Aplus to defend or prosecute any litigation, potentially including becoming a nominal party to legal action. Franchisees will be reimbursed for out-of-pocket litigation costs, unless the action results from their non-compliant use of the Marks or Copyrighted Works. This arrangement ensures that Aplus maintains brand consistency and protects its intellectual property, while also providing some protection to franchisees who properly use the Marks and Copyrighted Works.
Item 13 of the FDD also states that Aplus has exclusive control over any settlement or proceeding concerning any Mark. Franchisees must take actions that Aplus's counsel deems advisable to protect and maintain Aplus's interests in any proceeding or to otherwise protect and maintain Aplus's interests in the Marks. While Aplus is not required to defend franchisees against claims arising from their use of Aplus's Marks, Aplus will reimburse franchisees for all expenses reasonably incurred in any legal proceeding disputing their authorized use of any Mark, but only if the franchisee notifies Aplus of the proceeding in a timely manner and the franchisee has complied with Aplus's directions with regard to the proceeding. Aplus has the right to control the defense and settlement of any proceeding. Aplus will not reimburse franchisees for their expenses and legal fees for separate, independent legal counsel and for expenses in removing signage or discontinuing their use of any Mark, nor will Aplus reimburse franchisees for disputes where Aplus challenges the franchisee's use of a Mark.