Who has the exclusive right to control litigation arising out of infringement of Budget's Proprietary Marks?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
You must notify Budget immediately when you learn about an infringement of or challenge to your use of Budget's Proprietary Marks or of any person's claim of any rights in any of Budget's Proprietary Marks or any similar name or mark. Budget will take the action it thinks appropriate and has the exclusive right to control any litigation or administrative proceeding arising out of the infringement, challenge, or claim or otherwise relating to any of Budget's Proprietary Marks. Budget is not required to indemnify or defend you against claims from your use of Budget's Proprietary Marks, or to protect your right to use these marks. You must modify or discontinue the use of any of Budget's Proprietary Marks at Budget's direction. You will be granted the right to use the modified marks in accordance with the terms of the License Agreement applicable to the current proprietary marks. If this happens, we will reimburse you for your tangible costs of compliance (for example, changing signs). You must not directly or indirectly contest our right to our trademarks, trade secrets or business techniques that are part of a Budget franchise.
Source: Item 13 — TRADEMARKS (FDD pages 63–64)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Budget retains the exclusive right to control any litigation or administrative proceedings related to the infringement, challenge, or claim involving its proprietary marks. This means that if a third party infringes on Budget's trademarks, or if there's a legal challenge to the use of those marks, Budget, not the franchisee, will decide how to handle the legal action.
This provision is significant for prospective franchisees because it clarifies that Budget is responsible for protecting its brand and trademarks. While franchisees are obligated to notify Budget of any potential infringements or challenges, they do not have the authority to independently pursue legal action. This centralized control allows Budget to maintain a consistent legal strategy and protect the overall brand integrity.
However, the FDD also states that Budget is not required to indemnify or defend the franchisee against claims arising from the use of Budget's Proprietary Marks. Franchisees must also modify or discontinue the use of any of Budget's Proprietary Marks at Budget's direction. If this happens, Budget will reimburse the franchisee for tangible costs of compliance, such as changing signs. Franchisees cannot directly or indirectly contest Budget's rights to its trademarks, trade secrets, or business techniques that are part of the Budget franchise.