Under what circumstances will Budget indemnify a licensee against third-party damages related to trademark litigation?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
m. 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. Licensee shall not infringe upon the trademark rights of any third parties, will cease any infringing activities upon request by Budget and agrees to fully indemnify, defend and hold harmless Budget from any third party infringement claims and or damages suffered by Budget in any such litigation or proceeding arising from Licensee's activities.
- 2.3 Limitation On Use. The right of Licensee to use the Marks is derived solely from this Agreement and is limited to the conduct of the Rental Business pursuant to and in compliance with this Agreement and the Standards. Licensee will not use any of the Marks, or any variation thereof, other than in conformity with the above, and it will not use or incorporate any of the Marks in or as part of its corporate name or with any prefix, suffix or symbols, or in any modified form (including any local or special adaptations or artistic variations of any of the Marks), nor may Licensee use any Mark in connection with the sale of any unauthorized product or service, any other business or in any other manner not expressly authorized in writing by Budget. Licensee will not register or apply to register any trademarks or service marks containing or comprising the term Budget, or any of the other Marks, in whole or in part, at any time during or after the term of this Agreement in the United States or anywhere else in the world.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Budget will indemnify, defend, and hold harmless the licensee from third-party damages suffered in litigation or proceedings arising from the licensee's proper use of any mark. Budget has the option to resolve the matter by securing a license for the licensee at Budget's expense. Alternatively, Budget can require the licensee to discontinue using the infringing mark or modify its use to avoid infringing on the rights of a third party.
However, if the licensee infringes upon the trademark rights of any third parties, the licensee must cease any infringing activities upon request by Budget. In this case, the licensee agrees to fully indemnify, defend, and hold harmless Budget from any third-party infringement claims and damages suffered by Budget in any litigation or proceeding arising from the licensee's activities.
In cases where a settlement offer is made, if Budget withholds consent to a settlement offer that the licensee wishes to accept, Budget will take over the defense of the legal action. Budget will then indemnify the licensee for all costs and expenses related to the legal action incurred after Budget withholds its consent. However, if the actual settlement or judgment amount is greater than the rejected settlement offer, the licensee will be responsible for indemnifying Budget up to the amount of the rejected settlement offer, with Budget responsible for the excess. Conversely, if the actual settlement is less than the rejected offer, the licensee will indemnify Budget for the difference, in addition to other obligations.