Can an Azal Coffee franchisee settle a third-party claim related to intellectual property infringement without Azal Coffee's consent?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
If we become aware of a claim against you on account of any alleged infringement, unfair competition, or similar matter relating to your use of our intellectual property, we may take action as we deem necessary and appropriate to protect and defend you against the claim by any third party. You must not settle or compromise any claim by a third party without our prior written consent. We will have the sole right to defend, compromise, or settle any claim, in our discretion,
using attorneys of our choosing, and you agree to cooperate fully with us in connection with the defense of the claim. You may participate at your own expense in the defense or settlement, but our decisions with regard to our intellectual property will be final. We do not have an obligation under the Franchise Agreement to participate in your defense or to indemnify you for expenses or damages in a proceeding involving our intellectual property licensed to you.
Source: Item 14 — PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION (FDD pages 39–41)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, a franchisee cannot settle or compromise any third-party claim regarding intellectual property infringement without the franchisor's prior written consent. Azal Coffee retains the sole right to defend, compromise, or settle any such claim, using attorneys of their choosing. The franchisee is obligated to cooperate fully with Azal Coffee in the defense of the claim.
While the franchisee may participate in the defense or settlement at their own expense, Azal Coffee's decisions regarding their intellectual property are final. This means that even if a franchisee disagrees with Azal Coffee's strategy or settlement terms, Azal Coffee has the ultimate authority. However, Azal Coffee does not have an obligation under the Franchise Agreement to participate in the franchisee's defense or to indemnify them for expenses or damages in a proceeding involving intellectual property licensed to the franchisee.
This arrangement is fairly typical in franchising, as franchisors need to maintain tight control over their intellectual property to protect the brand and system standards. By retaining control over infringement claims, Azal Coffee can ensure consistent legal strategies and protect its trademarks, copyrights, and other proprietary assets. Prospective franchisees should understand that they will have limited autonomy in handling intellectual property disputes and must rely on Azal Coffee's expertise and judgment.