Under what circumstances will Carbones Pizzeria NOT indemnify a franchisee for trademark infringement?
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 Carbones Pizzeria's 2025 Franchise Disclosure Document, Carbones Pizzeria will indemnify a franchisee against third-party claims of trademark infringement related to the franchisee's use of the Names and Marks. However, this indemnification is conditional. Carbones Pizzeria will not provide indemnification if the franchisee's use of the trademarks does not comply with the franchise agreement's provisions. This includes any requirement imposed by Carbones Pizzeria to modify or discontinue the use of any name or mark, or to use substitute names or marks.
For a Carbones Pizzeria franchisee, this means it is crucial to adhere strictly to the brand standards and usage guidelines for the Names and Marks as outlined in the franchise agreement. If Carbones Pizzeria directs a franchisee to change or discontinue using a particular mark, the franchisee must comply to maintain indemnification coverage. Failure to do so could leave the franchisee responsible for legal liabilities arising from trademark infringement claims.
To be eligible for indemnification, the franchisee must also provide Carbones Pizzeria with notice of any trademark infringement claim within ten days of receiving it and must allow Carbones Pizzeria to manage the defense of the claim. This includes the right for Carbones Pizzeria to compromise, settle, or otherwise resolve the claim and to decide whether to appeal any final determination. This requirement ensures that Carbones Pizzeria maintains control over the legal strategy and can minimize potential damages and liabilities.
This type of indemnification arrangement is common in franchising, as it protects franchisees from liabilities arising from the use of trademarks that the franchisor owns and licenses. However, it also places responsibility on the franchisee to follow the franchisor's instructions and guidelines to maintain that protection. Prospective franchisees should carefully review the specific terms of the indemnification clause in the franchise agreement and understand their obligations to ensure they are covered in the event of a trademark infringement claim.