What is a Carls Jr. franchisee required to do if litigation involving the Proprietary Marks is instituted or threatened against them?

According to the 2025 Carls Jr. Franchise Disclosure Document, if any litigation involving the company's Proprietary Marks is instituted or threatened against a franchisee, the franchisee must immediately notify Carls Jr. in writing. Additionally, the franchisee is required to fully cooperate in defending or settling the litigation. The franchisee is prohibited from directly or indirectly contesting the validity or Carls Jr.'s ownership of the Proprietary Marks. This means a franchisee cannot challenge Carls Jr.'s right to use or protect its trademarks.

This requirement ensures that Carls Jr. maintains control over the defense and management of its brand's trademarks. By mandating immediate notification and full cooperation, Carls Jr. can promptly address any legal challenges and protect its brand identity. The prohibition against contesting the validity of the trademarks reinforces Carls Jr.'s ownership and prevents franchisees from undermining the brand's legal standing.

For a prospective franchisee, this means that they must be prepared to fully support Carls Jr. in any legal matters related to the trademarks. This could involve providing documentation, testimony, or other forms of assistance as needed. It also means that franchisees must recognize and respect Carls Jr.'s ownership of the trademarks and refrain from any actions that could jeopardize the brand's legal rights. This is a fairly standard clause in most franchise agreements, as franchisors need to protect their intellectual property rights consistently across all franchise locations.

It is important to note that the Franchise Agreement does not obligate Carls Jr. to defend or indemnify franchisees against claims of infringement or unfair competition arising from the use of the Proprietary Marks. Therefore, franchisees may be responsible for their own legal costs in such cases, highlighting the importance of adhering to Carls Jr.'s guidelines for using the trademarks to minimize the risk of legal issues.