If Aw requires a franchisee to use additional or substitute trademarks, who is responsible for the expenses?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.5 Discontinuance of Use of Marks. If it becomes advisable at any time, in our sole discretion, for you to modify or discontinue use of any Mark or for your Papa Ray's Pizza Restaurant to use one or more additional or substitute trademarks, service marks, trade dress or domain names, you agree to comply with our directions to modify or otherwise discontinue the use of the Mark, or use one or more additional or substitute trademarks, service marks, trade dress or domain names, within a reasonable time after our notice to you at your expense. If we require you to modify or discontinue use of any Mark, we have no obligations or liability to you for your actual expenditures or other costs you incur in order to comply with this obligation.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, if Aw requires a franchisee to modify or discontinue the use of any mark or to use additional or substitute trademarks, service marks, trade dress, or domain names, the franchisee is responsible for all expenses associated with complying with Aw's directions. This includes the actual expenditures or other costs incurred to make these changes. Aw bears no obligation or liability to reimburse the franchisee for these costs.
This stipulation places the financial burden of rebranding or updating marketing materials squarely on the franchisee. For example, if Aw decides to update its logo or trade dress, franchisees must bear the costs of updating signage, menus, and other branded materials to comply with the new standards. This could involve significant and unexpected expenses, impacting the franchisee's profitability.
While the franchisee bears the cost of changes, Aw does offer some protection. Aw will indemnify the franchisee against damages from third-party claims arising from the franchisee's use of Aw's marks, provided the franchisee complies with the franchise agreement and notifies Aw of any claims. However, this indemnification specifically excludes consequential damages like lost revenue or profits. This means that while Aw will defend the franchisee against trademark infringement lawsuits, it will not compensate the franchisee for any business losses suffered as a result of such a suit.
Prospective franchisees should carefully consider the potential costs associated with rebranding or trademark changes and factor these into their financial projections. It would be prudent to discuss with Aw how frequently such changes have occurred in the past and what the estimated costs were for franchisees. Understanding the potential financial impact of these changes is crucial for making an informed investment decision.