Who determines whether to commence or defend legal proceedings relating to Chatime's Intellectual Property?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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, Chatime has the authority to decide whether to initiate or defend legal actions concerning its intellectual property. Specifically, the FDD states that Chatime will make this determination at its "absolute discretion".
This means that as a franchisee, you cannot independently pursue legal action to protect Chatime's intellectual property, even if you believe it is being infringed upon. You are, however, required to provide all reasonable assistance to Chatime to register and enforce their intellectual property rights and take all reasonable steps to protect the Intellectual Property against any action or infringement by any person and immediately notify Chatime of any actual or potential threat or claim of infringement with respect to the Intellectual Property.
Chatime also bears the financial responsibility for any authorized legal proceedings related to intellectual property, as the FDD states that Chatime will cover all costs incurred in commencing or defending such actions, provided they have authorized the action. Franchisees are obligated to cooperate fully with Chatime in any legal actions and are prohibited from initiating their own legal proceedings related to the intellectual property. Chatime is entitled to receive the proceeds of all such legal actions, except for the remittance of costs.