During the Bhc franchise term, can the franchisee contest the validity of Bhc's Marks or Intellectual Property?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
instruction sheets, forms, methods of operation and goodwill are and, as between Franchisee and Franchisor, remain vested solely in Franchisor, and the use thereof is only co-extensive with the term of this Agreement.
- (c) Franchisee agrees that during the term of the Franchise, and after any assignment, expiration or termination of the Franchise, Franchisee will not, directly or indirectly, commit an act of infringement or contest or aid others in contesting the validity, distinctiveness, secondary meaning, ownership or enforceability of the Marks or Intellectual Property, or take any other action in derogation of the Marks or Intellectual Property, and that no monetary amount will be assigned as attributable to any goodwill associated with Franchisee's use of the System, the Marks or Intellectual Property.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee is prohibited from contesting the validity of Bhc's Marks or Intellectual Property during the franchise term, or after the agreement's assignment, expiration, or termination. This restriction extends to directly or indirectly committing any act of infringement or assisting others in contesting the validity, distinctiveness, secondary meaning, ownership, or enforceability of the Marks or Intellectual Property.
This provision ensures that the franchisee recognizes and respects Bhc's ownership and rights to its brand and associated intellectual property. It also prevents franchisees from taking any actions that could undermine the value or exclusivity of the Bhc brand. Furthermore, the agreement stipulates that no monetary amount will be assigned as attributable to any goodwill associated with the franchisee's use of the System, the Marks, or Intellectual Property.
For a prospective franchisee, this means they cannot challenge Bhc's trademarks, service marks, trade names, logos, or other intellectual property. This obligation remains in effect even after the franchise agreement ends. This is a standard clause in most franchise agreements, designed to protect the franchisor's brand and intellectual property rights. Franchisees benefit from the brand recognition and goodwill associated with the Marks, but they must acknowledge and respect the franchisor's ownership.
This clause is crucial for Bhc to maintain uniformity and protect its brand identity across all franchise locations. It ensures that franchisees do not attempt to create confusion or dilute the brand by using similar marks or challenging the validity of Bhc's intellectual property. Franchisees should fully understand this restriction before entering into a franchise agreement with Bhc.