If Brightstar Care defends a Brightstar Care franchisee against a third-party claim, is the franchisee entitled to reimbursement for legal fees?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
Unless it is established that a third party claim asserted against you is based, directly or indirectly, on your misuse of the Licensed Marks or the BrightStar Care Agency Program, we agree to defend you against a third party claim disputing your authorized use of any Licenses Mark or the BrightStar Care Agency Program, provided you have notified us immediately after learning of the claim and fully cooperate in defending the action. Because we will defend this particular third-party claim, you are not entitled to be reimbursed for legal or other professional fees or costs paid to independent legal counsel or others in connection with the matter. However, we will reimburse your actual out-of-pocket damages suffered (but not any lost profits or consequential damages) if it is determined in the action that we did not in fact have the right to authorize you to use the Licensed Mark or the BrightStar Care Agency Program. This reimbursement obligation does not impact our rights and your obligations under Section 5.5 of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 117–118)
What This Means (2025 FDD)
According to Brightstar Care's 2025 Franchise Disclosure Document, if Brightstar Care defends a franchisee against a third-party claim related to the franchisee's authorized use of the Licensed Marks or the Brightstar Care Agency Program, the franchisee is not entitled to reimbursement for legal or other professional fees. This is because Brightstar Care will be handling the defense of the claim. However, Brightstar Care will reimburse the franchisee for actual out-of-pocket damages suffered (excluding lost profits or consequential damages) if it is determined that Brightstar Care did not have the right to authorize the franchisee's use of the Licensed Mark or the Brightstar Care Agency Program.
This arrangement means that Brightstar Care retains control over the legal proceedings and negotiations related to the use of its Licensed Marks and Agency Program. The franchisee is obligated to notify Brightstar Care immediately upon learning of any such claim and must fully cooperate in the defense. The franchisee cannot settle or compromise any claim without Brightstar Care's consent and must adhere to Brightstar Care's decisions in handling disputes.
This policy aims to protect Brightstar Care's brand and system consistency by ensuring that all legal matters related to the Licensed Marks and Agency Program are handled uniformly. While the franchisee does not have to pay legal fees in these specific cases where Brightstar Care is providing a defense, they relinquish control over the legal process. The franchisee also bears the risk of not being reimbursed for lost profits or consequential damages, even if Brightstar Care is found to have lacked the authority to authorize the use of the Licensed Mark or Agency Program.
It is important for prospective franchisees to understand these conditions and consider the potential financial implications. Franchisees should be aware of their obligations to cooperate with Brightstar Care in any legal defense and the limitations on their ability to control the outcome of such disputes. Franchisees should also clarify with Brightstar Care what constitutes 'misuse of the Licensed Marks or the Brightstar Care Agency Program,' as this would be an instance where Brightstar Care would not defend the franchisee.