Regarding third-party claims against Atwell Suites, what are the requirements for providing notice and cooperation to the defending party, and what is the consequence of failing to provide timely notice?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensee shall notify IHG immediately of (i) an infringement, or a challenge to Licensee's use of any of the Marks; (ii) any objections, demands, controversies, allegations or actions asserted or taken by third parties involving any of the Marks or any part of the Brand System of which Licensee becomes aware; and, (iii) any potentially infringing or unauthorized uses of any of the Marks or any part of the Brand System of which Licensee becomes aware. IHG or its Affiliates will have the sole and exclusive right to handle disputes with third parties concerning use of all or any part of the Marks or Brand System, and Licensee will, at its reasonable expense, extend its full cooperation to IHG in all such matters.
"The Minnesota Department of Commerce requires that IHG indemnify Minnesota licensees against liability to third parties resulting from claims by third parties that the Licensee's use of IHG's trademark infringes trademark rights of the third party. IHG does not indemnify against the consequences of Licensee's use of IHG's trademark except in accordance with the requirements of the License, and, as a condition to indemnification, Licensee must provide notice to IHG of any such claim within ten (10) days and tender the defense of the claim to IHG. If IHG accepts the tender of defense, IHG has the right to manage the defense of the claim including the right to compromise, settle or otherwise resolve the claim, and to determine whether to appeal a final determination of the claim."
The party seeking defense or settlement of a third-party claim under this Section 7 will provide notice to the other party promptly upon learning of any claim for which defense or settlement may be sought, but failure to do so will have no effect except to the extent the other party is prejudiced by the delay. The party seeking defense or settlement will allow the other party to control the defense and settlement of the claim and will reasonably cooperate with the defense. The defending party will use counsel reasonably experienced in the subject matter at issue and will not settle a claim without the written consent of the party being defended, which consent will not be unreasonably withheld or delayed, except that no consent will be required to settle a claim where relief against the party being defended is limited to monetary damages that are paid by the defending party under this Section 7.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites' 2025 Franchise Disclosure Document, the standard requirements for handling third-party claims, specifically regarding trademark disputes, involve immediate notification to IHG (InterContinental Hotels Group) of any infringements, challenges to the licensee's use of the marks, objections, demands, controversies, allegations, or actions by third parties involving the marks or the Brand System. Additionally, the franchisee must report any potentially infringing or unauthorized uses of the marks or any part of the Brand System that they become aware of. The franchisee is obligated to extend full cooperation to IHG in managing these disputes at their reasonable expense. IHG retains the sole and exclusive right to handle disputes with third parties concerning the use of the Marks or Brand System.
For franchisees in Minnesota, there's an additional requirement. Minnesota law mandates that IHG indemnify its Minnesota franchisees against liability to third parties resulting from claims that the franchisee's use of IHG's trademark infringes on the trademark rights of a third party. As a condition for this indemnification, the franchisee must provide notice to IHG of any such claim within ten (10) days and tender the defense of the claim to IHG. If IHG accepts the defense, it has the right to manage the defense, including the right to compromise, settle, or otherwise resolve the claim, and to decide whether to appeal any final determination.
In general, the agreement states that failure to provide prompt notice to the other party (the defending party) will have no effect on defense or settlement of a third-party claim, unless the delay prejudices the defending party. The party seeking defense or settlement must allow the defending party to control the defense and settlement of the claim and must reasonably cooperate with the defense. The defending party is expected to use counsel reasonably experienced in the subject matter and cannot settle a claim without the written consent of the party being defended, unless the relief is limited to monetary damages paid by the defending party.
These stipulations ensure that Atwell Suites and IHG maintain control over brand protection and legal defense strategies, while also outlining the franchisee's responsibilities in reporting and cooperating with any legal challenges. The Minnesota amendment further clarifies IHG's obligations and the franchisee's rights within that state, particularly regarding trademark infringement claims.