What are Chocolate Fish Coffee franchisees obligated to do if they become aware of trademark infringement?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
e extent 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.
Superior Prior Rights and Infringing Uses
We do not know of either superior prior rights or infringing uses that could materially affect your use of the principal trademarks.
Source: Item 13 — TRADEMARKS (FDD pages 29–31)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, franchisees are obligated to notify Chocolate Fish Coffee if they become aware of any use of, or claims to, a trademark that is identical or confusingly similar to a trademark licensed to them. However, Chocolate Fish Coffee is not required to take any action after being notified. Chocolate Fish Coffee retains the right to control any administrative or legal proceedings related to the trademark.
This means that if a Chocolate Fish Coffee franchisee discovers another business using a similar name or logo, they must inform Chocolate Fish Coffee. While Chocolate Fish Coffee is not obligated to act, they do reserve the right to handle any legal matters pertaining to the trademark. This is a fairly standard practice in franchising, as franchisors typically want to maintain control over their brand's image and legal defense.
Chocolate Fish Coffee will defend the franchisee (at their own expense) against any legal action by a third party alleging trademark infringement, provided the franchisee uses Chocolate Fish Coffee's trademarks according to the franchise agreement. Chocolate Fish Coffee will also cover expenses and damages if the legal action is resolved unfavorably to the franchisee. This protection is contingent on the franchisee's proper use of the trademarks as outlined in the franchise agreement.
However, Chocolate Fish Coffee can require a franchisee to modify or discontinue using a trademark, and the franchisee will bear the expense. While Chocolate Fish Coffee states they are unaware of any superior prior rights or infringing uses that could materially affect a franchisee's use of the principal trademarks, this clause suggests that such situations could arise, potentially impacting a franchisee's business operations and costs.