What is the maximum continuous period of time that Chocolate Bash can discontinue commercial use of the trademarks before the Intercompany License Agreement can be cancelled?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
Albasha, LLC, our affiliate, owns the trademarks described in this Item. Under an Intercompany License Agreement between us and Albasha, LLC, we have been granted the exclusive right to sublicense the trademarks to franchisees throughout the United States. The agreement is of perpetual duration. It may be modified only by mutual consent of the parties. It may be canceled by our affiliate only if (1) we materially misuse the trademarks and fail to correct the misuse, or (2) we discontinue commercial use of the trademarks for a continuous period of more than one year. The Intercompany License Agreement specifies that if it is ever terminated, your franchise rights will remain unaffected.
Source: Item 13 — TRADEMARKS (FDD pages 26–28)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the Intercompany License Agreement between Chocolate Bash and its affiliate, Albasha, LLC, grants Chocolate Bash the exclusive right to sublicense trademarks to franchisees in the United States. This agreement is perpetual and can only be modified with mutual consent. However, Albasha, LLC can cancel the agreement if Chocolate Bash either materially misuses the trademarks without correcting the misuse, or if Chocolate Bash discontinues commercial use of the trademarks for a continuous period exceeding one year.
For a prospective Chocolate Bash franchisee, this is important because the Intercompany License Agreement ensures that Chocolate Bash has the right to license the trademarks to its franchisees. If Chocolate Bash were to lose the right to use these trademarks, it could significantly impact the franchisee's ability to operate under the Chocolate Bash brand. However, the agreement specifies that even if the Intercompany License Agreement is terminated, the franchisee's rights will remain unaffected.
This clause protects franchisees by ensuring their franchise rights are not automatically terminated if the Intercompany License Agreement between Chocolate Bash and its affiliate is cancelled. It provides a degree of security, knowing that their ability to operate under the Chocolate Bash name is somewhat insulated from potential issues between Chocolate Bash and Albasha, LLC regarding trademark use. Franchisees should still confirm with Chocolate Bash how their rights would be protected in practice if such a termination occurred.