Who bears the cost of defending a claim against Bhc's Master Franchisee related to trademark infringement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
9.5 Mark Infringement Claims and Defense of Marks.
- (a) If Master Franchisee receives notice or otherwise becomes aware of any claim, suit or demand, threatened or pending, against Master Franchisee by any party other than Franchisor, the Owner of the Marks or any of Franchisor's affiliates on account of any alleged infringement, unfair competition or similar matter arising from Master Franchisee's use of the Marks in accordance with the terms of this Agreement, or any misuse of the Marks by third parties on the Internet or otherwise, Master Franchisee agrees to immediately notify Franchisor of such claim, suit, demand or misuse. Master Franchisee will have no power, right or authority to settle or compromise such claim, suit, or demand by a third party or to intervene to stop misuse, without Franchisor's prior written consent. Franchisor will defend, compromise, or settle at Franchisor's discretion any such claim, suit or demand and take steps to stop misuse at Franchisor's cost and expense, using attorneys selected by Franchisor or the Owner of the Marks, and Master Franchisee agrees to cooperate fully in such matters.
- (b) Franchisor will indemnify Master Franchisee and hold Master Franchisee harmless from and against any and all judgments resulting from any claim, suit or demand arising from Master Franchisee's authorized and use of the Marks or Franchisor's Intellectual Property in accordance with the terms of this Agreement. Franchisor has the sole discretion to determine whether a similar trademark or service mark that is being used by a third party is confusingly similar to the Marks or Franchisor's Intellectual Property being used by Master Franchisee or constitutes a misuse of the Marks or Franchisor's Intellectual Property, and whether and what subsequent action, if any, should be undertaken with respect to such similar trademark or service mark or misuse.
(c) Master Franchisee hereby indemnifies Franchisor and holds Franchisor harmless from and against any and all judgments resulting from any claim, suit or demand arising from Master Franchisee's unauthorized and improper use of the Marks or Franchisor's Intellectual Property.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc will bear the cost of defending a claim against its Master Franchisee related to trademark infringement under specific conditions. If a claim, suit, or demand is made against the Master Franchisee by a party other than Bhc, the Owner of the Marks, or any of Bhc's affiliates, due to alleged infringement or unfair competition arising from the Master Franchisee's authorized use of the Marks, the Master Franchisee must promptly notify Bhc.
Bhc retains the discretion to defend, compromise, or settle such claims at its own cost and expense, using attorneys selected by Bhc or the Owner of the Marks. The Master Franchisee is obligated to cooperate fully in these matters. Furthermore, Bhc will indemnify the Master Franchisee and hold them harmless from any judgments resulting from claims arising from the Master Franchisee's authorized use of the Marks or Bhc's Intellectual Property, as long as it aligns with the terms of the agreement.
However, the Master Franchisee is responsible for indemnifying Bhc against any judgments resulting from claims, suits, or demands arising from the Master Franchisee's unauthorized and improper use of the Marks or Bhc's Intellectual Property. This means that if the Master Franchisee infringes on the trademarks in a way not authorized by the franchise agreement, they will be responsible for covering the costs of any resulting claims or lawsuits.