Is Churchs Chicken obligated to defend a franchisee against claims of infringement or unfair competition?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
You must promptly notify us of any suspected infringement of, or challenge to, our Proprietary Marks. We will control any administrative proceeding or litigation involving our Proprietary Marks and will decide whether to pursue any suspected infringer. If we defend or begin litigation relating to the Proprietary Marks, you must sign all documents and do what our counsel believes is necessary to carry out the defense or prosecution. Unless the litigation arises as a result of your use of the Proprietary Marks in a manner inconsistent with the Franchise Agreement, we will reimburse you for your out-of-pocket costs in doing these things (except that you will still bear the salary costs of your employees). Otherwise, we are not obligated by the Franchise Agreement, or otherwise, to defend the rights granted to you to use the Proprietary Marks or to defend you against claims of infringement or unfair competition. Nevertheless, it is ordinarily in our best interest to do so.
Source: Item 13 — TRADEMARKS (FDD pages 45–47)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, Churchs Chicken is generally not obligated to defend a franchisee against claims of infringement or unfair competition. However, if litigation arises due to the franchisee's use of the Proprietary Marks in a manner consistent with the Franchise Agreement, Churchs Chicken will reimburse the franchisee for their out-of-pocket costs in taking actions necessary to carry out the defense or prosecution. This excludes the salary costs of the franchisee's employees. Despite not being obligated, Churchs Chicken states that it is ordinarily in their best interest to provide a defense.
This means that if a franchisee is sued for using Churchs Chicken's trademarks correctly, Churchs Chicken may cover certain costs, but the franchisee will likely bear some expenses. This is a fairly typical arrangement in franchising, where the franchisor controls the trademarks but the franchisee operates the business and must participate in any legal defense.
It is important for a prospective Churchs Chicken franchisee to understand the circumstances under which Churchs Chicken will provide support in an infringement or unfair competition claim. Franchisees should clarify what specific 'out-of-pocket costs' Churchs Chicken will cover and under what conditions this support is provided. Understanding these obligations is crucial for assessing the potential financial risks associated with operating a Churchs Chicken franchise.