Under what conditions will Auntie Annes indemnify a franchisee against trademark infringement claims in Minnesota?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
- Item 13, "Trademarks," is amended by the addition of the following paragraph immediately:
The Minnesota Department of Commerce requires us to indemnify Minnesota franchisees against liability to third parties resulting from claims by third parties that the franchisee's use of our trademark infringes on trademark rights of the third party. We do not indemnify against the consequences of a franchisee's use of our trademark except in accordance with the requirements of the Franchise Agreement; and, as a condition to indemnification, you must: (i) provide prompt notice to us of any such claim; (ii) tender the defense of the claim to us; and (iii) cooperate with us in the defense against the claim. If we accept the tender of defense, we have 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.
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes' 2024 Franchise Disclosure Document, the Minnesota Department of Commerce requires Auntie Annes to indemnify its Minnesota franchisees against liability to third parties resulting from claims that the franchisee's use of the Auntie Annes trademark infringes on the trademark rights of a third party. However, this indemnification is not unconditional.
Auntie Annes does not provide indemnification except in accordance with the requirements of the Franchise Agreement. As a condition for indemnification, the franchisee must fulfill specific obligations. The franchisee must provide prompt notice to Auntie Annes of any such claim. The franchisee must also tender the defense of the claim to Auntie Annes. Finally, the franchisee is required to cooperate with Auntie Annes in the defense against the claim.
If Auntie Annes accepts the tender of defense, it retains the right to manage the defense of the claim. This includes the right to compromise, settle, or otherwise resolve the claim. Auntie Annes also has the right to determine whether to appeal a final determination of the claim. These stipulations ensure that Auntie Annes maintains control over the legal defense strategy while providing the required indemnification to the franchisee under Minnesota law.