If an Azal Coffee franchisee participates in the defense or settlement of a claim regarding intellectual property, who bears the expense?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
You must promptly notify us of any claim, suit, or demand against you on account of any alleged infringement, unfair competition, or similar matter relating to your use of the Intellectual Property. We will then 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 the Intellectual Property will be final.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, if a claim, suit, or demand is made against a franchisee regarding the use of Azal Coffee's intellectual property, the franchisee must promptly notify Azal Coffee. Azal Coffee will then take action to protect and defend the franchisee against the claim. Azal Coffee has the sole right to defend, compromise, or settle any claim using attorneys of their choosing. The franchisee must cooperate fully with Azal Coffee in the defense of the claim.
While Azal Coffee controls the defense, the franchisee may participate in the defense or settlement of the claim. However, the franchisee will bear their own expenses if they choose to participate. Azal Coffee's decisions regarding the intellectual property will be final.
This arrangement is fairly typical in franchising. Franchisors like Azal Coffee need to maintain tight control over intellectual property matters to ensure consistent brand standards and protect their trademarks. By retaining decision-making authority while allowing franchisee participation at their own cost, Azal Coffee balances its interests with those of its franchisees.