Under what conditions will Bft be liable for the legal expenses of a Bft franchisee related to mark infringement?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees to give such notices of trademark and service mark registrations and copyrights (including the ® and © symbols) as Franchisor specifies and to obtain such fictitious or assumed name registrations as may be required under Applicable Laws.
- 4.3 Notification of Infringement. 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 will be responsible for legal expenses it incurs in connection with litigation or other legal proceedings involving a third party's unauthorized use or infringement of its marks. However, Bft is not liable for any legal expenses of the franchisee unless two conditions are met. First, Bft must pre-approve the franchisee's legal expenses in writing and at its discretion. Second, the legal action must proceed from or arise out of the franchisee's authorized use of Bft's marks under the franchise agreement.
In simpler terms, if a third party infringes on Bft's trademarks, Bft will handle the legal proceedings and cover its own legal costs. However, if a franchisee gets into a legal dispute related to trademark infringement, Bft will only cover the franchisee's legal expenses if Bft has given prior written approval and the dispute arises from the franchisee's proper and authorized use of Bft's trademarks. This means a franchisee cannot expect Bft to foot the bill for just any legal issue related to trademarks; the situation must specifically involve authorized use and have Bft's explicit consent.
This is a fairly typical arrangement in franchising. Franchisors like Bft want to control trademark enforcement and protect their brand, so they usually handle infringement cases themselves. However, they also want to avoid being responsible for legal issues that arise from a franchisee's unauthorized actions. Therefore, the franchisee needs to get written permission from Bft to ensure Bft covers the legal expenses.