Under what circumstances will Bhc Franchisor indemnify the Master Franchisee regarding claims related to the Marks?
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.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc will indemnify the Master Franchisee and hold them harmless from judgments resulting from claims, suits, or demands arising from the Master Franchisee's authorized use of the Marks or Bhc's Intellectual Property, provided such use is in accordance with the terms of the Master 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 Intellectual Property, and whether any action should be taken regarding such similarity or misuse.
This means that if a third party sues the Master Franchisee for using Bhc's trademarks in a way that Bhc has authorized, Bhc will cover the costs of any resulting judgment. However, this protection only applies if the Master Franchisee is using the Marks and Intellectual Property as permitted by the franchise agreement. If the Master Franchisee uses the Marks improperly or without authorization, this indemnity does not apply, and the Master Franchisee is responsible for any resulting judgments.
It is important for prospective Master Franchisees to understand the scope of authorized use of Bhc's Marks and Intellectual Property as defined in the franchise agreement. Master Franchisees should also be aware that Bhc has the final say on whether a third party's use of similar marks constitutes infringement or misuse, and what actions, if any, Bhc will take. This clause protects the Master Franchisee from legal action stemming from authorized use of Bhc's brand assets, but places the onus on the Master Franchisee to adhere strictly to the franchise agreement's terms regarding trademark usage.