Is Chesters required to indemnify a franchisee for damages or expenses in a proceeding involving a copyright?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
We need not protect or defend copyrights, although we intend to do so if in the system's best interests. We have the right to control any action we choose to bring, even if you voluntarily bring the matter to our attention. We need not participate in your defense and/or indemnify you for damages or expenses in a proceeding involving a copyright.
Source: Item 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 33–34)
What This Means (2025 FDD)
According to the 2025 FDD, Chesters is not required to participate in a franchisee's defense or indemnify them for damages or expenses in a proceeding involving a copyright. Chesters retains the right to control any action they choose to bring, even if the franchisee brings the matter to their attention. However, Chesters states that they intend to protect and defend copyrights if it is in the best interest of the Chesters system.
This means that if a franchisee is sued for copyright infringement related to the operation of their Chesters restaurant, Chesters is not obligated to provide legal assistance or cover any resulting costs. The franchisee would be responsible for their own defense and any damages awarded. This could create a significant financial burden for the franchisee.
It is important for prospective Chesters franchisees to understand this lack of indemnification and to consider purchasing their own insurance to cover potential copyright infringement claims. Franchisees should also ensure they are using all copyrighted materials, such as menus and advertising, in accordance with Chesters's guidelines to minimize the risk of infringement.