What is the Camp Margaritaville licensee's responsibility when facing infringement claims by third parties related to the Margaritaville Intellectual Property?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
If any demand, claim or suit is asserted or instituted with respect to which a party may be entitled to indemnification under the foregoing provisions, such party shall give prompt notice thereof to the party who or which may be liable for indemnification, including full details to the extent known.
- d.
Third-Party Intellectual Property Claims.
With respect to infringement claims by third parties against Licensee asserting that the License or Sublicense of the Margaritaville Intellectual Property infringes their rights, Licensee shall give prompt notice thereof to Licensor and Licensor shall have the sole right to direct and control the defense and settlement of such claims at Licensor's sole expense, unless such claims are based on the breach of this Agreement
by Licensee, in which case such costs shall be borne exclusively by Licensee. Such rights shall not be exercised in an arbitrary or capricious manner.
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to the 2025 Camp Margaritaville FDD, if a third party asserts an infringement claim against the licensee regarding the Margaritaville Intellectual Property, the licensee must promptly notify the licensor. Generally, Camp Margaritaville's licensor has the sole right to manage the defense and settlement of these claims at its own expense.
However, there's an exception: if the infringement claim arises due to the licensee's breach of the agreement, the licensee is responsible for covering all associated costs. This means that if the licensee uses the intellectual property in a way not permitted by the franchise agreement, they will bear the financial burden of defending against any resulting infringement claims.
This clause protects the integrity of the Camp Margaritaville brand and ensures that the licensor maintains control over how its intellectual property is defended. It also incentivizes the licensee to adhere strictly to the terms of the franchise agreement to avoid potential liability for infringement claims.