What is the dependency for Bee Organized to reimburse a franchisee's costs in defending trademark usage?
Bee_Organized Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is sued in a legal proceeding or is threatened with legal action and/or a notice of infringement by a third party where the claims and/or causes of action directly relate to a third party claiming trademark infringement, unfair competition, and/or trademark dilution as a result of Franchisee's use of the Licensed Marks in accordance with the terms of this Agreement and the System (the "IP Claim"), then Franchisor shall indemnify Franchisee for the reasonable and direct costs incurred by Franchisee and/or a judgment entered against Franchisee, provided: (a) Franchisee immediately notified Franchisor of the IP Claim by a written notice sent to Franchisor via priority overnight courier; (b) Franchisee provided and afforded Franchisor the absolute opportunity and right to defend against the IP Claim and to select and appoint legal counsel of Franchisor's choosing; and (c) Franchisee utilized the Licensed Marks in accordance with the terms of this Agreement and the System. Franchisee agrees that time is of the essence with respect to notifying Franchisor of the IP Claim in accordance with this Agreement, including this Article 11.E.
Source: Item 23 — RECEIPTS (FDD pages 54–218)
What This Means (2025 FDD)
According to Bee Organized's 2025 Franchise Disclosure Document, if a franchisee faces a legal claim related to trademark infringement due to their use of Bee Organized's Licensed Marks, Bee Organized will cover the franchisee's reasonable and direct costs, including any judgment against them. However, this indemnification is contingent on several key conditions.
First, the franchisee must immediately notify Bee Organized of the IP Claim in writing via priority overnight courier. Second, the franchisee must give Bee Organized the absolute right and opportunity to defend against the claim, including selecting and appointing legal counsel of Bee Organized's choosing. Finally, the franchisee must have been using the Licensed Marks in accordance with the terms of the Franchise Agreement and the Bee Organized System.
These conditions highlight the importance of franchisees adhering strictly to Bee Organized's guidelines for using its trademarks. Failure to promptly notify Bee Organized or allowing them to control the legal defense could result in the franchisee being responsible for their own legal costs. This is a fairly standard clause in franchise agreements, as franchisors need to protect their brand and ensure consistent defense strategies against trademark claims.