Is Burros Fries obligated by the Franchise Agreement to protect a franchisee's right to use the Marks?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
able) or other administrative proceeding.
We are not obligated by the Franchise Agreement to protect any rights granted to you to use the Marks or protect you against claims of infringement or unfair competition with respect to them. The Franchise Agreement does not require that we participate in your defense or indemnify you for expenses or damages if you are a party to a judicial or administrative proceeding involving one of the Marks or if the proceeding gets resolved unfavorably to you. Although we are not contractually obligated to protect the Marks or your right to use them, as a matter of corporate policy, we intend to defend the Marks vigorously (Franchise Agreement Section 15.B).
You may not, without our written consent, in our sole discretion, commence or prosecute, or seek leave to intervene in, any litigation or other proceeding, including any arbitration proceeding, in which you purport to enforce any right or recover any element of damage arising from the use or infringement of any of the Marks or unfair competition.
Source: Item 13 — TRADEMARKS (FDD pages 40–42)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, Burros Fries is not obligated by the Franchise Agreement to protect any rights granted to the franchisee to use the Marks, nor are they obligated to protect the franchisee against claims of infringement or unfair competition. The Franchise Agreement does not require Burros Fries to participate in the franchisee's defense or indemnify them for expenses or damages if the franchisee is party to a judicial or administrative proceeding involving one of the Marks or if the proceeding gets resolved unfavorably to the franchisee. However, as a matter of corporate policy, Burros Fries intends to defend the Marks vigorously.
This means that if a franchisee is sued for trademark infringement related to their use of the Burros Fries Marks, the franchisee would generally be responsible for their own legal defense and any resulting damages. While Burros Fries states an intent to vigorously defend the Marks as a corporate policy, this is not a contractual obligation. Therefore, a franchisee cannot rely on Burros Fries to provide legal or financial assistance in such a situation.
This type of arrangement is not uncommon in franchising, where the franchisee is an independent business owner. However, it is important for prospective Burros Fries franchisees to understand this potential risk and consider obtaining their own legal counsel and insurance to protect themselves against trademark-related claims. Franchisees should also notify Burros Fries immediately in writing of any apparent infringement or challenge to their use of any Marks, or claim by any person of any rights in any Mark or any similar trade name, trademark or service mark of which they become aware. Burros Fries retains the sole discretion to take such action as they deem appropriate and the right to exclusively control any litigation, USPTO proceeding (if applicable) or other administrative proceeding.