Is Buildingstars required to defend or indemnify a franchisee in a proceeding involving a mark?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
You must notify us immediately of any apparent infringement or challenge to your use of any Mark, or any claim by any person of any rights in any Mark. We and our Affiliates will have the sole discretion to take such action as we deem appropriate and the right to exclusively control any litigation or administrative proceedings arising out of such infringement, challenge or claim. You must execute any and all instruments and documents, provide such assistance, and take any action that may be necessary or advisable to protect and maintain our interests in any litigation or other proceeding or otherwise to protect and maintain our interest in the Marks. The Franchise Agreement does not require us to participate in your defense and/or indemnify you for expenses or damages if you are a party to an administrative or judicial proceeding involving a Mark or if the proceeding is resolved unfavorably to you.
Source: Item 13 — TRADEMARKS (FDD pages 27–28)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, Buildingstars is not required to defend or indemnify its franchisees in legal proceedings involving trademarks. Specifically, the Franchise Agreement does not obligate Buildingstars to cover a franchisee's expenses or damages if the franchisee is involved in an administrative or judicial proceeding related to a Mark, or if the proceeding's outcome is unfavorable to the franchisee. However, the franchisee must immediately notify Buildingstars of any apparent infringement or challenge to the use of any Mark, or any claim by any person of any rights in any Mark. Buildingstars has the sole discretion to take action it deems appropriate and has the right to exclusively control any litigation or administrative proceedings arising out of such infringement, challenge, or claim.
This means that if a franchisee is sued for trademark infringement related to their Buildingstars business, they will likely be responsible for their own legal defense and any resulting damages. This is a notable risk for franchisees, as trademark disputes can be costly. While Buildingstars retains control over any litigation, they are not obligated to provide financial support to the franchisee.
In the event of any challenge to the trademark, the franchisee is obligated to assist Buildingstars in protecting the trademark. This includes executing documents and providing assistance as needed. This obligation underscores the franchisee's role in protecting Buildingstars's intellectual property, even though they may not receive direct financial support in a legal dispute.