Who is responsible for legal expenses incurred in litigation involving a third party's infringement on Bft's marks?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees to notify Franchisor immediately in writing if it becomes aware that any person who is not a licensee of Franchisor is using or infringing upon any of the Marks. Franchisee may not communicate with any person other than Franchisor and its counsel in connection with any such use or infringement. Franchisor will have discretion to determine what steps, if any, are to be taken in any instance of unauthorized use or infringement of any of its Marks and will have complete control of any litigation or settlement in connection with any claim of an infringement or unfair competition or unauthorized use with respect to the Marks. Franchisee will execute any and all instruments and documents and will assist and cooperate with any suit or other action undertaken by Franchisor with respect to such unauthorized use or infringement such as by giving testimony or furnishing documents or other evidence. Franchisor will be responsible for legal expenses incurred by Franchisor in connection with any litigation or other legal proceeding involving such third-party. Franchisor shall not be liable for any legal expenses of Franchisee unless (a) pre-approved in writing by Franchisor in its discretion, and (b) the action proceeds or arises out of Franchisee's authorized use of the Marks hereunder.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, Bft is responsible for the legal expenses it incurs in litigation or other legal proceedings against a third party for infringing on its marks. However, the franchisee is responsible for their own legal expenses unless Bft pre-approves them in writing and the action arises from the franchisee's authorized use of Bft's marks.
This means that if a third party infringes on Bft's trademarks, Bft will manage any resulting legal actions and cover its own legal costs. However, franchisees need to be aware that they are responsible for their own legal fees in such cases, unless they obtain written pre-approval from Bft and the legal action is a direct result of their authorized use of the Bft marks. This protects Bft from unauthorized legal actions taken by franchisees.
This arrangement is fairly typical in franchising, where the franchisor owns the trademarks and is responsible for protecting them. Franchisees are generally expected to notify the franchisor of any potential infringements, and the franchisor then decides how to proceed. By retaining control over trademark litigation, Bft can ensure consistent enforcement of its brand standards and protect the overall value of the Bft system.