Who is responsible for defending claims against a Bhc franchisee arising from the franchisee's authorized use of the Bhc 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 handle the defense, compromise, or settlement of any claim, suit, or demand against a franchisee arising from the franchisee's authorized use of Bhc's marks. This includes taking steps to stop any misuse of the marks. Bhc will manage these actions at its own cost and expense, using attorneys selected by Bhc or the owner of the marks. The franchisee is required to cooperate fully in these matters.
Bhc also commits to indemnify the franchisee, protecting them from any judgments resulting from claims related to the franchisee's authorized use of the marks or Bhc's intellectual property, as long as the franchisee uses them according to the franchise agreement. Bhc retains the sole discretion to determine if a third party's trademark or service mark is confusingly similar to Bhc's marks or constitutes a misuse of Bhc's intellectual property, and to decide what action, if any, should be taken.
However, the franchisee is responsible for indemnifying Bhc and holding Bhc harmless from any judgments resulting from claims, suits, or demands arising from the franchisee's unauthorized or improper use of the marks or Bhc's intellectual property. This means that if a franchisee misuses the Bhc marks, they are responsible for covering Bhc's losses and legal costs.
This arrangement is fairly typical in franchising, where the franchisor protects the brand's trademarks but holds franchisees accountable for proper usage. A prospective Bhc franchisee should carefully review the terms of the franchise agreement regarding the authorized use of the marks to avoid potential liabilities.