If Bhc's Master Franchisee receives notice of a claim against them related to trademark infringement, what is the Master Franchisee required to do?
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, if a Master Franchisee receives notice of a claim, suit, or demand against them (excluding those from Bhc, the Mark's owner, or Bhc's affiliates) related to alleged infringement, unfair competition, or similar issues arising from the Master Franchisee's authorized use of Bhc's marks, the Master Franchisee must immediately notify Bhc of the claim, suit, or demand. The Master Franchisee cannot settle or compromise the claim without Bhc's prior written consent.
Bhc will manage the defense, compromise, or settlement of the claim at its discretion and expense, using attorneys selected by Bhc or the Mark's owner. The Master Franchisee is required to cooperate fully in these matters. Bhc will indemnify the Master Franchisee from judgments resulting from claims arising from the Master Franchisee's authorized use of the marks or Bhc's intellectual property.
However, the Master Franchisee is responsible for indemnifying Bhc against judgments resulting from the Master Franchisee's unauthorized or improper use of the marks or Bhc's intellectual property. Bhc has the sole discretion to determine if a third-party trademark is confusingly similar to Bhc's and what action should be taken.