Who has the right to control litigation involving a Bonchon trademark licensed to a franchisee?
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.
If you learn that any third party whom you believe is not authorized to use the Proprietary Marks is using the Marks or any variant of the Marks, you must promptly notify us. We will determine whether or not we wish to take any action against the third party. You will have no right to make any demand or to prosecute any claim against the alleged infringer for the infringement.
Source: Item 13 — TRADEMARKS (FDD pages 65–68)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, Bonchon retains the right to control any administrative proceedings or litigation involving a trademark that it licenses to a franchisee. This means that Bonchon, not the franchisee, has the authority to manage and direct any legal actions related to the Bonchon trademarks.
If a franchisee faces a claim of infringement, unfair competition, or similar issues related to Bonchon's Proprietary Marks, the franchisee must promptly notify Bonchon. Bonchon will then take the necessary action to defend the franchisee and will indemnify the franchisee against third-party actions based solely on these claims. However, the franchisee cannot settle or compromise any claims without Bonchon's written consent. Bonchon has the right to defend and settle any claim at its sole expense, using its own counsel, and the franchisee must cooperate in the defense.
The Franchise Agreement grants Bonchon the authority to defend or settle these claims, and while the franchisee can participate at their own expense, Bonchon's decisions regarding the defense or settlement are final. Bonchon is not obligated to defend or indemnify a franchisee if the claim arises from the franchisee's violation of the Franchise Agreement in their use of the Proprietary Marks. This comprehensive control ensures brand consistency and legal protection for the Bonchon system.
Furthermore, if a franchisee discovers an unauthorized third party using Bonchon's Proprietary Marks, they must inform Bonchon, who will then decide whether to take action against the infringer. The franchisee does not have the right to make demands or prosecute claims against the alleged infringer. This reinforces Bonchon's centralized control over its trademarks and their enforcement, which is a common practice in franchising to protect the brand's integrity and value.