Who bears the cost and expense of defending, compromising, or settling infringement claims related to Bhc's Marks?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
9.5 Mark Infringement Claims and Defense of Marks.
- (a) If Franchisee receives notice or otherwise becomes aware of any claim, suit or demand, threatened or pending, against 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 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, Franchisee agrees to immediately notify Franchisor of such claim, suit, demand or misuse. 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 Franchisee agrees to cooperate fully in such matters.
- (b) Franchisor will indemnify Franchisee and hold Franchisee harmless from and against any and all judgments resulting from any claim, suit or demand arising from 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 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) Franchisee hereby indemnifies Franchisor and holds Franchisor harmless from and against any and all judgments resulting from any claim, suit or demand arising from 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 generally bear the costs of defending trademark infringement claims. Specifically, if a franchisee faces a claim related to their authorized use of Bhc's marks, Bhc will handle the defense, settlement, or compromise of the claim at its own expense. This includes selecting attorneys and managing the legal process. The franchisee is required to promptly notify Bhc of any such claims and fully cooperate in the matter. This arrangement protects the franchisee from potentially significant legal expenses associated with trademark disputes, provided they are using the marks as authorized.
However, this protection does not extend to situations where the franchisee is using the marks improperly or without authorization. In such cases, the franchisee is responsible for indemnifying Bhc against any judgments, claims, or demands arising from their unauthorized use of the marks. This means the franchisee would have to cover Bhc's legal costs and any resulting damages or settlements. Therefore, it is crucial for franchisees to adhere strictly to the guidelines and terms outlined in the franchise agreement regarding the use of Bhc's trademarks and intellectual property.
This allocation of responsibility is fairly standard in franchising. Franchisors typically defend franchisees against claims arising from authorized use of their trademarks, as the franchisor owns the trademarks and controls their use within the system. Franchisees are responsible when they deviate from the approved usage and create legal liabilities. This division of responsibility ensures brand consistency and protects the overall integrity of the Bhc brand.