Does the Bonchon indemnification clause cover claims arising from a franchisee's infringement of a third party's copyright?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
your advertising, promotional materials, signs, decorations, paper goods (including disposable food containers, napkins, menus, and all forms and stationery used in or by your franchised Business), and all other items we may designate, to feature and bear the Proprietary Marks in the form, color, location and manner we prescribe.
15.05 Our Defense of Proprietary Marks and Copyrights
If you receive notice, are informed or learn of any claim, suit or demand against you on account of any alleged infringement, unfair competition, or similar matter relating to the use of the Proprietary Marks or any of our copyrights (each, a "claim"), you agree to promptly notify us. We will then
promptly take any action we may consider necessary to protect and defend you against the claim and indemnify you against any loss, cost or expense incurred in connection with the claim, so long as the claim is based solely on any alleged infringement, unfair competition, or similar matter relating to your use of the Proprietary Marks or copyrights. You may not settle or compromise the claim by a third party without our prior written consent. We will have the right to defend, compromise and settle the claim at our sole cost and expense, using our own counsel. You agree to cooperate fully with us in connection with the defense of the claim. You grant irrevocable authority to us, and appoint us as your attorney in fact, to defend and/or settle all claims of this type.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, Bonchon's defense of proprietary marks and copyrights is outlined in Section 15.05. If a franchisee receives notice of any claim, suit, or demand against them due to alleged infringement, unfair competition, or similar matters relating to the use of Bonchon's Proprietary Marks or copyrights, the franchisee must promptly notify Bonchon. Bonchon will then take action to protect and defend the franchisee against the claim and indemnify them against any loss, cost, or expense incurred, provided the claim is solely based on the franchisee's use of Bonchon's Proprietary Marks or copyrights. The franchisee cannot settle or compromise the claim without Bonchon's prior written consent. Bonchon has the right to defend, compromise, and settle the claim at its sole cost and expense, using its own counsel, and the franchisee must cooperate fully in the defense of the claim.
However, Bonchon has no obligation to defend or indemnify the franchisee if the claim arises out of the franchisee's use of the Proprietary Marks or copyrights in violation of the terms of the Franchise Agreement. This means that if a franchisee misuses Bonchon's trademarks or copyrighted materials in a way that is not authorized by the agreement, Bonchon will not be responsible for defending them against any resulting claims.
In practical terms, this section of the FDD highlights the importance of franchisees adhering strictly to the guidelines and terms set forth in the Franchise Agreement regarding the use of Bonchon's Proprietary Marks and copyrights. Franchisees must ensure that their use of these assets is compliant with the agreement to be eligible for Bonchon's defense and indemnification in case of infringement claims. This also underscores the need for franchisees to seek clarification from Bonchon if they are unsure about the proper use of these marks and materials to avoid potential violations and loss of protection.