What actions must a Buns On Fire franchisee take to be eligible for indemnification by the franchisor?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchisor agrees to indemnify Franchisee against, and to reimburse Franchisee for, all direct damages, excluding consequential, punitive, or special damages, for which Franchisee is held liable in any proceeding in which Franchisee's use of any Mark pursuant to and in compliance with this Agreement is held to constitute trademark infringement, unfair competition or dilution, and for all costs reasonably incurred by Franchisee in the defense of any such claim brought against him or in any such proceedings in which he is named as a party, provided that Franchisee has timely notified the Franchisor of such claim or proceedings, has otherwise complied with this Agreement and has tendered complete control of the defense of such to the Franchisor. If the Franchisor defends such claims, the Franchisor shall have no obligation to indemnify or reimburse Franchisee with respect to any fees or disbursements of any attorney retained by Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire Franchise Disclosure Document, Buns On Fire will indemnify a franchisee against direct damages, excluding consequential, punitive, or special damages, if the franchisee is held liable in a proceeding where their use of the Buns On Fire marks, in compliance with the agreement, is found to be trademark infringement, unfair competition, or dilution. This also covers reasonably incurred costs in defending against such claims.
To be eligible for this indemnification, the franchisee must notify Buns On Fire of the claim or proceedings in a timely manner, comply with all other terms of the franchise agreement, and tender complete control of the defense to Buns On Fire. If Buns On Fire assumes the defense, they are not obligated to cover fees or disbursements for any attorney retained separately by the franchisee.
This means that if a franchisee is sued for trademark infringement related to their use of the Buns On Fire brand, and they have followed all the rules in the franchise agreement, Buns On Fire will cover the direct costs of the lawsuit. However, the franchisee must let Buns On Fire take over the legal defense to qualify for this coverage. This is a fairly standard arrangement in franchising, as it allows the franchisor to protect its brand consistently.