Does Chocolate Bash have an obligation to take action when notified of the use of, or claims to, similar trademarks?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
described in this section.
The franchise agreement obligates you to notify us of the use of, or claims of rights to, a trademark identical to or confusingly similar to a trademark licensed to you. The franchise agreement does not require us to take affirmative action when notified of these uses or claims. We have the right to control any administrative proceedings or litigation involving a trademark licensed by us to you.
If you use our trademarks in accordance with the franchise agreement, then (i) we will defend you (at our expense) against any legal action by a third party alleging infringement by your use of the trademark, and (ii) we will indemnify you for expenses and damages if the legal action is resolved unfavorably to you.
Under the franchise agreement, we may require you to modify or discontinue using a trademark, at your expense.
Source: Item 13 — TRADEMARKS (FDD pages 26–28)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, franchisees are obligated to notify Chocolate Bash of any use of, or claims to, trademarks that are identical or confusingly similar to the trademarks licensed to them. However, Chocolate Bash is not required to take any specific action upon receiving such notification. Chocolate Bash retains the right to control any administrative or legal proceedings involving a trademark licensed to its franchisees.
This means that while a Chocolate Bash franchisee must inform the franchisor of potential trademark infringements, Chocolate Bash is not obligated to take action. This could leave the franchisee in a vulnerable position if Chocolate Bash chooses not to pursue the matter. However, Chocolate Bash will defend the franchisee (at its expense) against any legal action by a third party alleging infringement if the franchisee uses Chocolate Bash's trademarks in accordance with the franchise agreement. Chocolate Bash will also cover expenses and damages if the legal action is resolved unfavorably to the franchisee.
Chocolate Bash also retains the right to require a franchisee to modify or discontinue the use of a trademark, and the franchisee would bear the expense of doing so. This highlights the importance of franchisees adhering strictly to the franchise agreement regarding trademark usage. While Chocolate Bash states that it does not know of superior prior rights or infringing uses that could materially affect a franchisee's use of the principal trademarks, the ultimate responsibility for trademark protection rests with Chocolate Bash, not the franchisee.