If Azal Coffee's right to use its trademarks is challenged, what potential impact could this have on the franchisee?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
11,157 | Principal | | 05/24/2023 |
We do not have a federal registration for the principal trademarks listed in the table above. Therefore, the trademarks do not have as many legal benefits and rights as a federally registered trademark. If our right to use the trademarks is challenged, you may have to change to an alternative trademark, which may increase your expenses.
We intend to file all required affidavits relating to our Franchise Marks.
Determinations, Agreements or Uses Affecting Trademarks
There are no currently effective material determinations of the USPTO, Trademark Trial and Appeal Board, the Trademark Administrator of any state, or any court, any pending interference, opposition or cancellation proceeding nor any pending material federal or state court litigation involving our principal Franchise Marks. There are no agreements currently in effect that limit our rights to use or license the principal Franchise Marks in any manner material to your franchise. We do not know of any superior prior rights or infringing uses of the principal Franchise Marks that could materially affect your use of our principal Franchise Marks.
Franchisee's Obligations
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 Franchise Marks. You must promptly notify us if you receive notice or are informed or learn that any third
party, who you believe is using the Franchise Marks or any name or mark confusingly similar to the Franchise Marks without our authorization.
Defense of Trademarks
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 the Franchise Marks, 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 the Franchise Marks 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 the Franchise Marks licensed to you.
Prosecution of Infringers
If we become aware that a third party is using the Franchise Marks or any name or mark confusingly similar to the Franchise Marks 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 the Franchise Marks. 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.
Source: Item 13 — TRADEMARKS (FDD pages 38–39)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the company does not have a federal registration for its principal trademarks. This means that the trademarks lack some of the legal protections afforded to federally registered trademarks. If Azal Coffee's right to use its trademarks is challenged, franchisees may be required to switch to an alternative trademark.
This change to an alternative trademark could increase a franchisee's expenses. The FDD states that Azal Coffee may modify or discontinue using any Franchise Mark at its discretion, and franchisees must abide by these changes at their own expense. Franchisees do not have the right to continue using a Franchise Mark after Azal Coffee has made modifications or changes.
If a claim, suit, or demand is made against a franchisee regarding alleged infringement or unfair competition related to the Franchise Marks, the franchisee must promptly notify Azal Coffee. Azal Coffee may take action to defend the franchisee against the claim, but the franchisee must not settle or compromise any claim without Azal Coffee's prior written consent. Azal Coffee has the sole right to defend, compromise, or settle any claim, and the franchisee must cooperate fully with Azal Coffee in the defense of the claim. The franchisee may participate in the defense or settlement at their own expense, but Azal Coffee's decisions regarding the Franchise Marks are final. 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 the Franchise Marks.
If Azal Coffee becomes aware that a third party is using the Franchise Marks without authorization, it will determine whether or not to take action against the third party. The franchisee does not have the right to make any demand against any alleged infringer or to prosecute any claim against the alleged infringer. If Azal Coffee chooses to prosecute any infringement of the Franchise Marks, the franchisee must sign all documents and do all acts necessary for that action. Azal Coffee does not have an obligation to take affirmative action when notified of infringement and will have exclusive rights in any damages awarded or recovered in any prosecution of an infringement claim related to the Franchise Marks.