Who is responsible for legal costs in a legal proceeding related to the Better Blend franchise agreement?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
12.3 Infringement.
- (a) Defense of Franchisee. If Franchisee has used the Marks in accordance with this Agreement, then (i) BBF shall defend Franchisee (at BBF's expense) against any Action by a third party alleging infringement by Franchisee's use of a Mark, and (ii) BBF shall indemnify Franchisee for expenses and damages if the Action is resolved unfavorably to Franchisee.
- (b) Infringement by Third Party. Franchisee shall promptly notify BBF if Franchisee becomes aware of any possible infringement of a Mark by a third party. BBF may, in its sole discretion, commence or join any claim against the infringing party.
- (c) Control. BBF shall have the exclusive right to control any prosecution or defense of any Action related to possible infringement of or by the Marks.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to the 2024 Better Blend Franchise Disclosure Document, Better Blend Franchising, LLC (BBF) will defend the franchisee (at BBF's expense) against any action by a third party alleging infringement if the franchisee has used the marks in accordance with the agreement. BBF will also indemnify the franchisee for expenses and damages if the action is resolved unfavorably to the franchisee. This means that Better Blend takes on the responsibility for legal defense costs in cases where a third party claims the franchisee's use of Better Blend's trademarks infringes on their rights, provided the franchisee has followed the franchise agreement.
However, the franchisee is responsible for promptly notifying Better Blend if they become aware of any possible infringement of a mark by a third party. Better Blend retains the exclusive right to control any prosecution or defense of any action related to possible infringement of or by the marks. This indicates that while Better Blend covers the costs and manages the legal process for infringement claims against the franchisee, the franchisee must actively report any potential infringements they observe.
In the context of a Guaranty and Non-Compete Agreement, the guarantor is responsible for paying all costs incurred by BBF, including reasonable attorney fees, in enforcing the Guaranty. If multiple guarantors sign the Guaranty, each will have joint and several liability. This means that if Better Blend has to take legal action to enforce the Guaranty, the guarantor(s) will be responsible for covering Better Blend's legal costs.