What costs does Casiola indemnify a franchisee for in the event of a successful IP Claim?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
If Franchisee is sued in a legal proceeding or is threatened with legal action and/or a notice of infringement by a third party where the claims and/or causes of action directly relate to a third party claiming trademark infringement, unfair competition, and/or trademark dilution as a result of Franchisee's use of the Licensed Marks in accordance with the terms of this Agreement and the System (the "IP Claim"), then Franchisor shall indemnify Franchisee for the reasonable and direct costs incurred by Franchisee and/or a judgment entered against Franchisee, provided: (a) Franchisee immediately notified Franchisor of the IP Claim by a written notice sent to Franchisor via priority overnight courier; (b) Franchisee provided and afforded Franchisor the absolute opportunity and right to defend against the IP Claim and to select and appoint legal counsel of Franchisor's choosing; and (c) Franchisee utilized the Licensed Marks in accordance with the terms of this Agreement and the System. Franchisee agrees that time is of the essence with respect to notifying Franchisor of the IP Claim in accordance with this Agreement, including this Article 11.E.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, Casiola will indemnify a franchisee if the franchisee is sued or threatened with legal action related to trademark infringement, unfair competition, or trademark dilution resulting from the franchisee's use of Casiola's Licensed Marks, provided the franchisee uses the marks according to the franchise agreement and system standards. This is referred to as an "IP Claim."
Casiola's indemnification covers the reasonable and direct costs incurred by the franchisee, as well as any judgment entered against the franchisee in such a case. However, the franchisee must immediately notify Casiola of the IP Claim via written notice sent by priority overnight courier. The franchisee must also give Casiola the absolute right and opportunity to defend against the IP Claim, including the right to select and appoint legal counsel of Casiola's choosing.
This means that if a franchisee is using Casiola's trademarks correctly and gets sued for trademark infringement, Casiola will cover the franchisee's reasonable legal costs and any resulting judgment. However, it is critical that the franchisee informs Casiola immediately and allows Casiola to control the legal defense. Failure to do so could void Casiola's obligation to indemnify the franchisee.