If Carbones Pizzeria accepts the defense of a trademark claim, who has the right to manage the defense?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
- d. Franchisor shall indemnify Franchisee against liability to third parties resulting from claims by third parties that such Franchisee's use of the Names and Marks infringes trademark rights of the third party. Franchisor will not indemnify against the consequences of Franchisee's use of Franchisor's trademark except those uses made in accordance with the requirements of provisions of this Agreement (including any requirement imposed by Franchisor to modify or discontinue the use of any name or mark and/or use one or more additional or substitute names or marks). As a condition to such indemnification, Franchisee must provide notice to Franchisor of any such claim within ten (10) days of its receipt of a claim and tender the defense of the claim to Franchisor. If Franchisor accepts the tender of defense, Franchisor has the right to manage the defense of the claim, including the right to compromise, settle or otherwise resolve the claim and to determine whether to appeal a final determination of the claim.
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to the 2025 Carbones Pizzeria Franchise Disclosure Document, if a franchisee is faced with a third-party claim that their use of the Names and Marks infringes on the trademark rights of that third party, the franchisee must notify Carbones Pizzeria within ten days of receiving the claim and offer Carbones Pizzeria the defense of the claim. If Carbones Pizzeria accepts the defense, they have the right to manage the defense of the claim. This includes the right to compromise, settle, or otherwise resolve the claim, and to decide whether or not to appeal a final determination of the claim.
This means that while the franchisee is responsible for promptly informing Carbones Pizzeria of any potential trademark infringement claims, Carbones Pizzeria retains control over the legal strategy and decisions related to defending against such claims. The franchisee must use the Names and Marks in accordance with the franchise agreement.
This arrangement is fairly common in franchising, as it allows the franchisor to maintain brand consistency and control legal costs across the entire franchise system. It also protects the franchisee from potentially large legal expenses, provided they adhere to the agreement's terms and conditions. However, the franchisee must relinquish control over the defense strategy to Carbones Pizzeria.