Does Burros Fries have an obligation to reimburse the franchisee for costs associated with a trademark change?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
In the event we determine in our sole judgment that challenging any such third party's use of the Marks will not likely be successful, or would not be economically feasible to achieve, or if Franchisee shall be required to cease using the Marks (or any of them) by court order, or as a result of any settlement of any such trademark claim by a prior registrant or any pre-existing user, or any other such trademark claim, or if we shall deem it necessary or appropriate to change the name of the Franchise in order to mitigate any potential exposure or damages arising under any trademark claim, Franchisee shall promptly change the name of its Franchise, and thereafter utilize an alternative name established by us. We shall not otherwise be liable for any losses or any consequential damages, incidental damage, exemplary damages, special damages, including lost future profits, resulting from or arising out of any trademark service mark, and/or unfair competition claim(s). We shall have no obligation to reimburse the Franchisee for any costs, causes of action, damages, demands, expenses, fines, liabilities, or penalties, arising out of such a trademark, service mark, logo or trade name change.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, Burros Fries is not obligated to reimburse franchisees for costs associated with a trademark change. Specifically, if Burros Fries deems it necessary to change the franchise name to mitigate potential damages arising from a trademark claim, the franchisee must promptly adopt the alternative name provided by Burros Fries.
Burros Fries explicitly states that it "shall have no obligation to reimburse the Franchisee for any costs, causes of action, damages, demands, expenses, fines, liabilities, or penalties, arising out of such a trademark, service mark, logo or trade name change." This includes costs related to signage, advertising materials, and other items bearing the old name and mark.
This policy places the financial burden of a trademark change entirely on the franchisee. Prospective franchisees should carefully consider this potential expense and factor it into their financial planning. It is advisable to inquire about the likelihood of a name change and to understand the potential costs involved in rebranding, as well as negotiate the terms of the agreement to mitigate this risk.