Is there any situation where a Chocolate Bash franchisee would be responsible for the expenses of defending against a third-party infringement claim if they have used the Marks in accordance with the Franchise Agreement?

According to Chocolate Bash's 2024 Franchise Disclosure Document, if a franchisee uses the Marks (trade names, trademarks, service marks and logos) in accordance with the Franchise Agreement, Chocolate Bash will defend the franchisee, at Chocolate Bash's expense, against any action by a third party alleging infringement due to the franchisee's use of a Mark. Chocolate Bash will also cover expenses and damages if the action is resolved unfavorably to the franchisee.

This means that as long as the Chocolate Bash franchisee adheres to the guidelines and stipulations outlined in the Franchise Agreement regarding the use of Chocolate Bash's Marks, the franchisor assumes the responsibility for any legal defense and associated costs arising from third-party infringement claims. This protects the franchisee from potentially significant financial burdens related to legal disputes over trademark usage.

However, the franchisee must promptly notify Chocolate Bash if they become aware of any possible infringement of a Mark by a third party. Chocolate Bash retains the exclusive right to control any prosecution or defense of any action related to possible infringement of or by the Marks. This clause underscores the importance of franchisees diligently monitoring for potential trademark infringements by others and promptly reporting such instances to Chocolate Bash, ensuring the brand's intellectual property is protected.