Under what conditions will Churchs Chicken reimburse a franchisee's out-of-pocket costs for litigation related to Proprietary Marks?
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 will reimburse a franchisee's out-of-pocket costs related to administrative proceedings or litigation involving its Proprietary Marks under specific conditions. If Churchs Chicken defends or begins litigation relating to its Proprietary Marks, the franchisee must sign all documents and take actions deemed necessary by Churchs Chicken's counsel to support the defense or prosecution.
Churchs Chicken will cover the franchisee's out-of-pocket costs for these actions, excluding the salary costs of the franchisee's employees, provided the litigation does not arise from the franchisee's use of the Proprietary Marks in a manner inconsistent with the Franchise Agreement. This means that if the franchisee is using the trademarks correctly according to the agreement and is assisting Churchs Chicken in defending those trademarks, Churchs Chicken will bear the direct expenses.
However, Churchs Chicken is not obligated to defend the rights granted to the franchisee to use the Proprietary Marks or to defend the franchisee against claims of infringement or unfair competition, unless the litigation arises as a result of the franchisee's appropriate use of the Proprietary Marks. Despite this, the FDD states that it is ordinarily in Churchs Chicken's best interest to provide such defense. This clause highlights the importance of adhering to the Franchise Agreement regarding the use of Proprietary Marks to ensure potential cost coverage in case of litigation.