What is the meaning of 'trademark' in the context of a Chop5 Salad Kitchen franchise?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 13: TRADEMARKS]
We grant you the right to operate a Restaurant under the name "CHOP5 Salad Kitchen®" and the associated logo. By trademark, we mean trade names, trademarks, service marks and logos used to identify your Restaurant or the products or services you sell. We may change the trademarks you may use from time to time, including by discontinuing use of the Marks listed in Item 13. If this happens, you must change to the new trademark at your expense.
Our affiliate, CHOP5 IP LLC, owns the following trademarks that have been registered on the Principal Register of the United States Patent and Trademark Office: [Item 13: TRADEMARKS]
All required affidavits have been filed and we intend to file all renewals by the required renewal date.
Franchise Disclosure Document (2024) On December 19, 2023, we entered into an Intellectual Property License Agreement with CHOP5 IP LLC (the
"License Agreement"). Under the terms of the License Agreement, CHOP5 IP LLC granted us the right to use the Marks in the CHOP5 Salad Kitchen System and sublicense the Marks to our franchisees. The term of the License Agreement automatically renews annually, unless it is terminated in accordance with its terms. CHOP5 IP LLC is permitted to terminate the License Agreement only if we: (a) declare bankruptcy or become insolvent; (b) breach CHOP5 IP LLC's quality control standards and fail to cure the breach within a 60-day cure period; or (c) consent to the termination. If the License Agreement is terminated, it states all sublicenses granted by us to our franchisees will continue in full force and effect until the expiration or termination of the applicable franchise agreement. No other agreements limit our right to use or sublicense use of the Marks.
You must follow our rules when using the Marks. You cannot use the Marks as part of a corporate name or with modifying words, designs, or symbols unless you receive our prior written consent. We must approve any fictitious name you intend to use. You cannot use the Marks relating to the sale of any product or service we have not authorized.
You must notify us immediately if you discover an infringing use (or challenge to your use) of the Marks. We will take the action we think appropriate. We are not required to take any action if we do not feel it is warranted. We may require your assistance, but you may not control any proceeding or litigation relating to our Marks. You must not directly or indirectly contest our or CHOP5 IP LLC's rights to the Marks.
[Item 13: TRADEMARKS]
We will indemnify you against and reimburse you for: (a) all damages for which you are held liable in a judicial or administrative proceeding based on your use of the Marks in compliance with the Franchise Agreement and Manual; and (b) all costs you reasonably incur in defending against any such claim. Our indemnification obligation only applies if you notify us of the claim or proceeding in a timely manner and you are in full compliance with the Franchise Agreement and Manual.
Except as disclosed above, the Franchise Agreement does not require that we: (a) protect your right to use the Marks; (b) protect you against claims of infringement or unfair competition arising out of your use of the Marks; or (c) participate in your defense or indemnify you for expenses or damages you incur if you are a party to an administrative or judicial proceeding involving our Marks or if the proceeding is resolved in a manner unfavorable to you.
Source: Item 13 — TRADEMARKS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, a trademark encompasses trade names, trademarks, service marks, and logos used to identify the restaurant or its products and services. Chop5 Salad Kitchen grants franchisees the right to operate a restaurant under the name "CHOP5 Salad Kitchen®" and its associated logo. However, Chop5 Salad Kitchen retains the right to change these trademarks, and franchisees are responsible for the expense of adopting any new trademarks.
The FDD indicates that Chop5 IP LLC, an affiliate, owns the registered trademarks and licenses them to Chop5 Salad Kitchen for sublicensing to franchisees. This license agreement automatically renews annually unless terminated under specific conditions, such as bankruptcy, failure to meet quality control standards, or consent to termination. Importantly, the FDD states that termination of the license agreement between Chop5 IP LLC and Chop5 Salad Kitchen does not affect the sublicenses granted to franchisees, which remain in effect until the franchise agreement expires or is terminated.
Franchisees must adhere to Chop5 Salad Kitchen's rules regarding trademark usage and cannot use the marks as part of a corporate name or with unauthorized modifications without prior written consent. Franchisees are also obligated to notify Chop5 Salad Kitchen immediately of any infringement or challenges to the use of the trademarks. While Chop5 Salad Kitchen will take action as it deems appropriate, it is not obligated to take any action. Franchisees must also avoid contesting the rights to the marks. Chop5 Salad Kitchen will indemnify franchisees against damages and costs resulting from the franchisee's authorized use of the trademarks, provided the franchisee notifies Chop5 Salad Kitchen of any claims in a timely manner and is in full compliance with the Franchise Agreement and Manual.