What assistance is a Chatime franchisee obligated to provide to the franchisor regarding the registration and enforcement of intellectual property rights in the territory?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
11.4 Protection of Intellectual Property
- (1) Franchisee must:
- (a) Provide all reasonable assistance to Franchisor to register and enforce Franchisor's intellectual property rights in the Territory;
- (b) Take all reasonable steps to protect the Intellectual Property against any action or infringement by any person;
- (c) Immediately notify Franchisor of any actual or potential threat or claim of infringement with respect to the Intellectual Property.
- (2) Franchisor, at its absolute discretion, will determine whether to commence or defend legal proceedings relating to the Intellectual Property.
- (3) Payment of all Costs incurred in commencing or defending legal proceedings relating to the Intellectual Property will be made by Franchisor, provided that Franchisor has authorized the taking of any such action.
- (4) Franchisee must cooperate fully with Franchisor in relation to any actions conducted under this clause 11.4 and must not bring any actions itself relating to the Intellectual Property.
- (5) Save for remittance of Costs under clause 11.4(3) (if any), Franchisor will be entitled to receive the proceeds of all actions conducted under this clause 11.4.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, franchisees have specific obligations to assist Chatime in protecting its intellectual property. Franchisees must provide all reasonable assistance to Chatime to register and enforce Chatime's intellectual property rights within their territory. This includes taking reasonable steps to protect the intellectual property against any infringement or potential infringement by others.
Furthermore, the franchisee is required to immediately inform Chatime of any actual or potential threats or claims of infringement related to the intellectual property. However, Chatime retains absolute discretion in deciding whether to initiate or defend any legal proceedings concerning the intellectual property.
While the franchisee is obligated to assist, Chatime will cover the costs of any legal proceedings, provided Chatime has authorized such actions. The franchisee must fully cooperate with Chatime in any actions taken to protect the intellectual property and is prohibited from independently pursuing any legal actions related to it. Chatime is entitled to receive the proceeds from any legal actions taken under this clause, except for any cost remittances made to the franchisee.