If Azal Coffee chooses to prosecute an infringement of its intellectual property, what actions are franchisees required to take?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
If we become aware that a third party is using our intellectual property without our authorization, we will, in our sole discretion, determine whether or not we will take any action against the third party on account of the alleged infringement of our intellectual property. You will not have any right to make any demand against any alleged infringer or to prosecute any claim of any kind or nature whatsoever against the alleged infringer for or on account of the infringement. If we choose to prosecute any infringement of our intellectual property, you must sign all documents and do all acts necessary or incidental to that action as our counsel may reasonably request. We do not have an obligation under the Franchise Agreement to take affirmative action when notified of infringement. We will have exclusive rights in any damages awarded or recovered in any prosecution of an infringement claim related to our intellectual property and we will not have any obligation to share any awards or recoveries with 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, if Azal Coffee decides to take legal action against a third party for infringing on its intellectual property, franchisees are obligated to assist in the process. Specifically, franchisees must sign all necessary documents and perform all actions that Azal Coffee's counsel reasonably requests to facilitate the legal action.
However, the FDD also clarifies that franchisees have no right to independently demand action against an alleged infringer or to prosecute any claims related to the infringement. The decision to prosecute an infringement lies solely with Azal Coffee. Furthermore, Azal Coffee is not obligated to take any affirmative action even if notified of an infringement.
Moreover, Azal Coffee retains exclusive rights to any damages awarded or recovered from the prosecution of an infringement claim, and it has no obligation to share any of these recoveries with its franchisees. This means that while franchisees are required to cooperate in the legal process if requested, they do not receive any direct financial benefit from successful infringement claims. This is a fairly standard arrangement in franchising, as the intellectual property in question belongs to the franchisor, not the franchisee.