Does a Chesters franchisee have a contractual obligation to notify the franchisor of any apparent infringement of a Mark?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
The Agreement does not require us to protect your right to use the Marks listed above or to protect you against claims of infringement or unfair competition from your use of the Marks. You have no contractual obligation to notify us of any apparent infringement or challenge to your use of any Mark or of any person's claim of any rights in any Mark. In all these cases, we have the right to take the action we deem appropriate (including no action). Because we own the Marks, we would expect to control exclusively any litigation, USPTO proceeding, or other administrative proceeding arising from any infringement, challenge, or claim. We have no obligation to participate in your defense and/or indemnify you for expenses or damages if you are a party to an administrative or judicial proceeding involving a Mark we license to you or if the proceeding is resolved unfavorably toward you. You must cooperate with us in defending or settling litigation. Our Agreement does not address our right to change the Marks during the franchise term.
Source: Item 13 — TRADEMARKS (FDD pages 31–33)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, a franchisee does not have a contractual obligation to notify Chesters of any apparent infringement or challenge to the use of any Mark, or any person's claim of rights in any Mark. Chesters retains the right to take any action it deems appropriate, including no action at all. Because Chesters owns the Marks, it would expect to exclusively control any litigation, USPTO proceeding, or other administrative proceeding arising from any infringement, challenge, or claim.
Chesters is not obligated to participate in a franchisee's defense or indemnify them for expenses or damages if the franchisee is involved in an administrative or judicial proceeding involving a Mark licensed to them, especially if the proceeding is resolved unfavorably. However, the franchisee must cooperate with Chesters in defending or settling litigation.
This arrangement is typical in franchising, where the franchisor owns and controls the brand's intellectual property. While franchisees are not obligated to police the trademarks, they are required to cooperate with Chesters in any legal defense or settlement efforts. This protects Chesters's brand and ensures consistent handling of trademark issues across the franchise system.