Under what conditions will Casiola indemnify a franchisee against direct damages for trademark infringement?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
We will protect your right to use the Licensed Marks and other related rights and protect you against claims of infringement and unfair competition related to the Licensed Marks, provided that you use the Licensed Marks in accordance with the terms of your Franchise Agreement, as designated by us in the Manuals, and otherwise, as we instruct you. We will indemnify you against direct damages for trademark infringement in a proceeding arising out of your use of the Licensed Marks, provided your use of the Licensed Marks comply with the terms of your Franchise Agreement, the Manuals, our written instructions, and that you have timely notified us of the claim, have given us sole control of the defense and settlement of the claim, and you are in compliance with your Franchise Agreement. If we defend the claim, we have no obligation to indemnify or reimburse you with respect to any fees or disbursements of any attorney that you retain.
Source: Item 13 — TRADEMARKS (FDD pages 32–34)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, Casiola will indemnify a franchisee against direct damages for trademark infringement under specific conditions. Casiola's obligation to protect franchisees from infringement claims is contingent upon the franchisee's adherence to the terms outlined in the Franchise Agreement, the operational guidelines provided in the Manuals, and any written instructions issued by Casiola.
Specifically, Casiola will provide indemnification if the franchisee's use of the Licensed Marks complies with all stipulated guidelines. Furthermore, the franchisee must promptly notify Casiola of any trademark infringement claims. The franchisee must also grant Casiola sole control over the defense and settlement of the claim. Finally, the franchisee must be in full compliance with all terms of the Franchise Agreement at the time the claim arises.
However, if Casiola assumes the defense of the claim, it is not obligated to cover any attorney fees or disbursements incurred by the franchisee if the franchisee chooses to retain their own legal counsel. This condition highlights the importance of adhering to Casiola's directives and allowing them to manage the legal proceedings to ensure coverage under the indemnification agreement. This is a fairly standard clause in franchise agreements, as franchisors typically want to control the legal strategy to protect the brand and trademark effectively.