Is a Chatime franchisee allowed to independently bring legal actions relating to the intellectual property?
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, a franchisee is generally not allowed to independently bring legal actions relating to the intellectual property. The FDD states that the franchisee must provide all reasonable assistance to Chatime to register and enforce its intellectual property rights in the territory. The franchisee must also 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 retains the absolute discretion to determine whether to commence or defend legal proceedings relating to the intellectual property. Payment of all costs incurred in commencing or defending legal proceedings relating to the intellectual property will be made by Chatime, provided that Chatime has authorized the taking of any such action. The franchisee must cooperate fully with Chatime in relation to any actions conducted and must not bring any actions itself relating to the intellectual property.
Chatime is entitled to receive the proceeds of all actions conducted, save for remittance of costs to the franchisee. This means that Chatime maintains control over the intellectual property and any legal actions related to it, ensuring a consistent approach to protecting its brand and system-wide interests. The franchisee's role is to support Chatime in these efforts, not to act independently.