Who is entitled to proceeds from litigation relating to the Cinnaholic mark?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
You must notify us promptly of any unauthorized use of the Mark of which you have knowledge or of any challenge to the validity of our ownership of or our right to license others to use the Mark. We will take the action, if any, we believe to be appropriate. We have the right, but no obligation, to initiate, direct, and control any litigation or administrative proceeding relating to the Mark, including, but not limited to, any settlement. We will be entitled to retain any and all proceeds, damages, and other sums, including attorneys' fees, recovered or owed to us or our affiliates in connection with any such action. You must execute all documents and, render any other assistance we may deem necessary to any such proceeding or any effort to maintain the continued validity and enforceability of the Mark. We will defend you against any third party claim, suit, or demand arising out of your use of the Mark. If we, in our sole discretion, determine that you have used the Mark in accordance with the Franchise Agreement, the cost of such defense and the cost of any judgment or settlement, will be borne by us. If we, in our sole discretion, determine that you have not used the Mark in accordance with the Franchise Agreement, those costs will be borne by you. In the event of any litigation relating to your use of the Mark, you will do such acts as may, in our opinion, be necessary to carry out such defense or prosecution, including becoming a nominal party to any legal action. Except to the extent that such litigation is the result of your use of the Mark in a manner inconsistent with the terms of the Franchise Agreement or the Manuals, we agree to reimburse you for your out-of-pocket costs in doing such acts.
Source: Item 13 — TRADEMARKS (FDD pages 37–39)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic retains all rights and proceeds from any litigation relating to its trademarks. As a franchisee, you are required to promptly notify Cinnaholic of any unauthorized use of the Cinnaholic mark or any challenges to Cinnaholic's ownership or right to license the mark. Cinnaholic has the right, but not the obligation, to initiate, direct, and control any litigation or administrative proceeding relating to the mark, including any settlement.
This means that if Cinnaholic pursues legal action to protect its trademarks, any proceeds, damages, or other sums recovered, including attorneys' fees, will belong to Cinnaholic. The franchisee must cooperate with Cinnaholic in any such proceeding by executing documents and providing assistance as needed to maintain the validity and enforceability of the mark.
However, Cinnaholic will defend the franchisee against any third-party claim, suit, or demand arising out of the franchisee's use of the mark, provided that the franchisee has used the mark in accordance with the Franchise Agreement. If the franchisee's use of the mark is not in accordance with the Franchise Agreement, the franchisee will bear the costs of the defense and any resulting judgment or settlement. In the event of litigation related to the franchisee's use of the mark, the franchisee must take necessary actions to assist in the defense or prosecution, and Cinnaholic will reimburse the franchisee for out-of-pocket costs, unless the litigation results from the franchisee's inconsistent use of the mark.
This arrangement is typical in franchising, where the franchisor owns the trademarks and is responsible for protecting them. The franchisee benefits from the use of a recognized brand but must adhere to the franchisor's standards and guidelines for using the mark. The franchisee's cooperation in protecting the mark is essential, but the franchisor retains control over legal proceedings and the resulting financial benefits.