What is the required action for a Budget licensee if they become aware of a potential trademark infringement?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensee shall notify Budget immediately in writing of any apparent infringement of or challenge to Licensee's use of any Mark or claim by any person other than Budget of any rights in any Mark or any similar trade name, trademark or service mark of which Licensee becomes aware.
Licensee shall not communicate with any person other than Budget and Budget's counsel in connection with any such infringement, challenge or claim.
Budget will have sole discretion to take such action as it deems appropriate and the right to control exclusively any litigation or administrative proceeding arising out of any such infringement, challenge or claim or otherwise relating to any Mark.
Licensee shall execute any documents, render such assistance and do such acts and things as may, in the opinion of counsel for Budget, be necessary or advisable to protect the interest of Budget in any such litigation or proceeding or to otherwise protect the interest of Budget in the Marks.
Budget will indemnify, defend and hold harmless Licensee from any third party damages suffered by Licensee in any such litigation or proceeding arising from Licensee's proper use of any Mark, and Budget may resolve the matter by obtaining a license for Licensee at Budget's expense, or by requiring that Licensee discontinue using the infringing mark or modify Licensee's use of such mark to avoid infringing the rights of any third party.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, a licensee must take specific actions upon discovering a potential trademark infringement. The licensee is required to immediately notify Budget in writing if they become aware of any apparent infringement or challenge to their use of any Budget mark. This also applies to any claim by another person asserting rights in a Budget mark or any similar trade name, trademark, or service mark.
Furthermore, the Budget licensee is explicitly instructed not to communicate with any party other than Budget and Budget's legal counsel regarding the infringement, challenge, or claim. This ensures that Budget maintains control over the response and legal strategy.
Budget retains sole discretion to take any action it deems appropriate, including controlling any litigation or administrative proceedings related to the infringement. The licensee is obligated to execute documents, provide assistance, and perform any actions deemed necessary by Budget's counsel to protect Budget's interest in any litigation or proceeding, or to otherwise protect Budget's interest in the marks. Budget will defend the licensee from third party damages suffered by the licensee in any litigation arising from the licensee's proper use of any mark. Budget may resolve the matter by obtaining a license for the licensee at Budget's expense, or by requiring that the licensee discontinue using the infringing mark or modify the licensee's use of such mark to avoid infringing the rights of any third party.
These stipulations are designed to protect Budget's trademarks and ensure consistent management of any infringement issues. It is typical in franchising for the franchisor to control trademark protection, as the brand's reputation and value are central to the franchise system.