What is Belocal's obligation regarding participation in a franchisee's defense if they are party to a judicial proceeding involving the Marks?

According to Belocal's 2025 Franchise Disclosure Document, Belocal is not obligated to participate in a franchisee's defense or to cover their expenses if the franchisee is involved in legal proceedings related to Belocal's trademarks. This means that if a franchisee is sued for trademark infringement or unfair competition related to the use of Belocal's marks, Belocal is not required to provide legal assistance or financial support for the franchisee's defense.

However, the FDD stipulates that franchisees must immediately inform Belocal of any trademark infringements or challenges to the use of the marks. Franchisees are also required to refrain from communicating with anyone other than Belocal, its affiliates, or their counsel regarding such matters. Belocal retains the sole discretion, but not the obligation, to take any action it deems appropriate and has the right to exclusively control any litigation or proceeding arising from alleged infringements or claims concerning the marks.

Furthermore, franchisees are obligated to provide any assistance and execute any documents that Belocal's counsel deems necessary to protect Belocal's interests in any litigation or proceeding related to the trademarks. This includes actions to maintain the validity and enforceability of the marks. Franchisees are prohibited from taking any actions that could prejudice or interfere with Belocal's rights regarding the marks, or from contesting the validity of Belocal's interest in the marks.