Is Baya Bar obligated by the Franchise Agreement to protect a franchisee's right to use the Marks?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
se of the Marks is in full compliance with the terms of the Franchise Agreement.
Except as provided above, we are not obligated by the Franchise Agreement to protect any rights granted to you to use the Marks or to protect you against claims of infringement or unfair competition with respect to them. Although we are not contractually obligated to protect the Marks or your right to use them, as a matter of corporate policy we intend to defend the Marks vigorously.
We may require you, at your expense, to discontinue or modify your use of any of the Marks or to use one or more additional or substitute trade names, service marks, trademarks, symbols, logos, emblems and indicia of origin if we determine that an addition or substitution will benefit the System.
The license to use the Marks granted in the Franchise Agreement is non-exclusive to you. We have and retain certain rights in the Marks including the following:
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- To grant other licenses for the use of the Marks in addition to those licenses already granted or to be granted to franchisees;
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- To develop and establish other systems using the Marks or other names or marks, and to grant licenses or franchises in those systems without providing any rights to you; and
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- To engage, directly or indirectly, at wholesale, retail or otherwise, in (a) the production, distribution, license and sale of products and services and (b) the use of the Marks and any and all trademarks, trade names, service marks, logos, insignia, slogans, emblems, symbols, designs and other identifying characteristics we may develop for that purpose.
Source: Item 13 — TRADEMARKS (FDD pages 40–41)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, Baya Bar is generally not obligated by the Franchise Agreement to protect a franchisee's right to use the Marks. The FDD specifies that Baya Bar is not contractually obligated to protect the Marks or a franchisee's right to use them. However, as a matter of corporate policy, Baya Bar intends to defend the Marks vigorously.
Despite the lack of contractual obligation, Baya Bar will indemnify a franchisee against and reimburse them for all damages for which they are held liable for their use of any of the Marks, provided that the franchisee's conduct in the proceeding and use of the Marks is in full compliance with the terms of the Franchise Agreement.
The franchisee is required to immediately notify Baya Bar of any apparent infringement of the Marks or any challenge to their use of the Marks. The franchisee is not permitted to communicate with any person other than Baya Bar, its designated affiliates, its counsel, and the franchisee's counsel regarding any infringement, challenge, or claim. Baya Bar has the right to exclusively control any litigation or USPTO or other administrative or agency proceeding caused by any infringement, challenge, or claim relating to the Marks. The franchisee must sign any documents and take actions deemed necessary by Baya Bar's counsel to protect Baya Bar's interests in any legal or administrative proceedings or to otherwise protect and maintain the interests of Baya Bar and any other person or entity having an interest in the Marks.
This arrangement is fairly typical in franchising. While the franchisor owns the trademarks, the franchisee is on the front line in their territory and has a responsibility to report any potential infringement. The franchisor then has the right to control the legal response to protect the overall brand. The indemnity clause offers some protection to the franchisee, but it is conditional on their compliance with the Franchise Agreement.