What conditions must a Carvel franchisee in Minnesota meet to be indemnified against trademark infringement claims?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
The Minnesota Department of Commerce requires us to indemnify Minnesota franchisees against liability to third parties resulting from claims by third parties that the franchisee's use of our trademark infringes on trademark rights of the third party. We do not indemnify against the consequences of a franchisee's use of our trademark except in accordance with the requirements of the Franchise Agreement; and, as a condition to indemnification, you must: (i) provide prompt notice to us of any such claim; (ii) tender the defense of the claim to us; and (iii) cooperate with us in the defense against the claim. If we accept the tender of defense, we have 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 100–353)
What This Means (2025 FDD)
According to the 2025 Carvel Franchise Disclosure Document, Minnesota franchisees have specific protections and obligations regarding trademark infringement claims. The Minnesota Department of Commerce mandates that Carvel indemnify its Minnesota franchisees against liabilities arising from third-party claims that the franchisee's use of the Carvel trademark infringes upon the trademark rights of another party. This means that Carvel is required to protect the franchisee from financial losses resulting from such lawsuits. However, this indemnification is not unconditional.
To be eligible for indemnification, a Carvel franchisee in Minnesota must adhere to certain requirements. First, the franchisee must provide prompt notice to Carvel of any trademark infringement claim. Second, the franchisee must formally tender the defense of the claim to Carvel, essentially handing over the legal defense to the franchisor. Finally, the franchisee must fully cooperate with Carvel in the defense against the claim. This cooperation may involve providing documentation, assisting in investigations, and following Carvel's instructions regarding the legal proceedings.
If Carvel accepts the tender of defense, the company has the right to manage the defense of the claim. This includes the authority to compromise, settle, or otherwise resolve the claim, and to determine whether to appeal any final determination made in the case. This level of control is typical in franchising, as the franchisor has a vested interest in protecting its brand and trademarks. By retaining control over the defense, Carvel can ensure a consistent and strategic approach to trademark litigation, which benefits both the franchisor and the franchisee.