Can a Bonchon franchisee settle a trademark infringement claim without written consent?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
We have the right to control any administrative proceedings or litigation involving a trademark licensed by us to you. If you learn of any claim against you for alleged infringement, unfair competition, or similar claims about the Proprietary Marks, you must promptly notify us. We will promptly take the action we consider necessary to defend you. We must indemnify you for any action against you by a third party based solely on alleged infringement, unfair competition, or similar claims about the Proprietary Marks. You may not settle or compromise any of these claims without our previous written consent. We will have the right to defend and settle any claim at our sole expense, using our own counsel. You must cooperate with us in the defense. Under the Franchise Agreement, you irrevocably grant us authority to defend or settle these claims. You may participate at your own expense, but our decisions with regard to the defense or settlement will be final. We will have no obligation to defend or indemnify you if the claim against you relates to your use of the Proprietary Marks in violation of the Franchise Agreement.
Source: Item 13 — TRADEMARKS (FDD pages 65–68)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, a franchisee is not allowed to settle or compromise any claims related to alleged trademark infringement, unfair competition, or similar issues concerning Bonchon's Proprietary Marks without obtaining prior written consent from Bonchon. If a franchisee faces such a claim, they must promptly inform Bonchon, who will then take the necessary actions to defend the franchisee. Bonchon will cover the expenses for defending and settling any claims, using their own legal counsel. The franchisee is obligated to cooperate in the defense.
Bonchon retains the right to manage any administrative or legal proceedings involving a trademark licensed to the franchisee. The Franchise Agreement grants Bonchon the authority to defend or settle these claims, and while the franchisee can participate in the defense at their own cost, Bonchon's decisions regarding the defense or settlement are final. Bonchon is not obligated to defend or indemnify the franchisee if the claim arises from the franchisee's violation of the Franchise Agreement in their use of the Proprietary Marks.
This arrangement is typical in franchising, as it allows Bonchon to maintain brand consistency and control over its trademarks. It protects the brand's reputation and ensures a unified legal strategy. The franchisee benefits from Bonchon's expertise and financial support in handling complex legal matters, but they must relinquish control over settlement decisions to Bonchon. This is a critical aspect for prospective franchisees to understand, as it impacts their autonomy in legal disputes related to the Bonchon brand.