Is Belocal obligated to defend or indemnify a franchisee for claims relating to the Copyrighted Materials?

According to Belocal's 2025 Franchise Disclosure Document, Belocal is not obligated to protect any rights a franchisee has to use the Copyrighted Materials, nor is it obligated to defend or indemnify a franchisee for claims relating to the Copyrighted Materials. Copyrighted Materials include Belocal's Franchise Brand Standards Manual, the design elements of the Marks, bulletins, correspondence and communications with franchisees, training, advertising and promotional materials, the content and design of any Online Presence, the content and design of all of Belocal's publications, other written materials relating to the operation of the Franchised Business and the System, and any other works of authorship owned by Belocal fixed in a tangible medium of expression. Belocal may change the Copyrighted Materials at any time, and franchisees must use the then-current Copyrighted Materials and discontinue the use of previous Copyrighted Materials as required by Belocal.

If there is any infringement of the Copyrighted Materials, the franchisee must immediately notify Belocal. The franchisee must also notify Belocal of any challenge to their use of any of the Copyrighted Materials or claim by any person of any rights in any of the Copyrighted Materials. The franchisee and their Principals must agree not to communicate with any person other than Belocal, any designated affiliate, and their counsel about any infringement, challenge, or claim of this type. Belocal has sole discretion, but not the obligation, to take any action it deems appropriate and the right to exclusively control any litigation, or U.S. Copyright Office (or other) proceeding, arising out of any alleged infringement, challenge, or claim concerning any of the Copyrighted Materials.

Franchisees must execute all instruments and documents and give Belocal any assistance that, in Belocal's counsel's opinion, may be necessary or advisable to protect and maintain Belocal's interests or those of its affiliates in any litigation or proceeding of this type or to otherwise protect and maintain their interests in the Copyrighted Materials. Belocal may, in its sole discretion, modify or discontinue use of the Copyrighted Materials or other confidential information and/or use other information and/or rights in their place. If Belocal decides to modify or discontinue use of any of the Copyrighted Materials or other confidential information for any reason, the franchisee must do the same, at their expense.

This means that if a third party sues a Belocal franchisee for copyright infringement related to the materials Belocal provides, Belocal is not required to defend the franchisee in court or cover any resulting damages. This is a significant risk for franchisees, as they could face substantial legal costs and liabilities if such a claim arises. It is important for prospective franchisees to understand this lack of protection and consider obtaining their own insurance or legal advice to mitigate this risk.