What is the Best Western customer's obligation to mitigate damages if AutoClerk's service infringes on intellectual property rights?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
If the Service, or any part of the Service, is, or in AutoClerk's opinion is likely to infringe, misappropriate or otherwise violate any third party's Intellectual Property Rights, or if Customer's use of the Service is enjoined or threatened to be enjoined, AutoClerk may, at its option: (i) obtain the right for Customer to continue to use the Service as contemplated by this Agreement; (ii) modify or replace the Service; or (iii) terminate this Agreement, in its entirety or with respect to the affected feature of the Service, effective immediately on written notice to Customer.
In the event this Agreement is terminated pursuant to the foregoing, Customer shall cease all use of the Service, and AutoClerk shall refund to Customer, a pro rata share of any Fees prepaid by Customer for the remaining portion of the Term.
SECTION 4 SETS FORTH CUSTOMER'S SOLE REMEDIES AND AUTOCLERK'S AND ITS AFFILIATES' SOLE LIABILITY AND OBLIGATION FOR ANY ACTUAL, THREATENED OR ALLEGED ACTIONS THAT THIS AGREEMENT OR ANY SUBJECT MATTER HEREOF (INCLUDING THE SERVICE) INFRINGES, MISAPPROPRIATES OR OTHERWISE VIOLATES ANY INTELLECTUAL PROPERTY RIGHTS OF ANY PARTY.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to the 2025 Best Western FDD, if AutoClerk's service is believed to infringe on intellectual property rights, AutoClerk has the option to (i) obtain the right for the customer to continue using the service, (ii) modify or replace the service, or (iii) terminate the agreement with written notice to the customer. If the agreement is terminated, the customer must stop using the service, and AutoClerk will refund a pro rata share of any prepaid fees for the remaining term.
This means that Best Western franchisees using AutoClerk's services are subject to AutoClerk's discretion in handling potential intellectual property infringements. AutoClerk can choose to secure the rights for continued use, modify the service, or terminate the agreement. If terminated, the franchisee's obligation is to cease using the service, and they will receive a refund for the unused portion of their prepaid fees.
The FDD specifies that Section 4 outlines the customer's sole remedies and AutoClerk's sole liability for any actions related to intellectual property rights infringements. This implies that franchisees have limited recourse beyond what is described in this section if such issues arise. It is important for franchisees to understand these limitations and potential disruptions to their service.
This arrangement is fairly typical in franchise agreements involving third-party software or services. The franchisor (Best Western) aims to limit its liability and provide a clear resolution path through the third-party vendor (AutoClerk). Franchisees should carefully consider the potential impact of service disruptions and the scope of available remedies when evaluating this aspect of the franchise agreement.