Who keeps the sums obtained in settlement or as a damages award in any copyright proceeding or litigation related to the Cinnaholic franchise?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
You must promptly notify us of any unauthorized use of our copyrighted materials or any unauthorized use or disclosure of confidential information, including by your employees. You must notify us of any challenge to your right to use or the ownership of any copyrighted materials or confidential information. We are not required to protect or defend our copyrights, although we intend to do so when it is in the best interests of the CINNAHOLIC® franchise system. We have the exclusive right to control any copyright litigation. We have the right to keep all sums obtained in settlement or as a damages award in any proceeding or litigation without any obligation to share any portion of the settlement sums or damages award with you. While we are not required to participate in your defense or to indemnify you for damages or expenses you incur if you are a party to any administrative or judicial proceeding involving our confidential information or other information in which we claim common law rights and copyright protection, we may reimburse you for your liability and reasonable costs in connection with defending our confidential information and other information in which we claim common law rights and copyright protection.
Source: Item 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 39–40)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic retains all sums obtained from settlements or damages awarded in copyright proceedings or litigation, without any obligation to share these funds with the franchisee. This means that if Cinnaholic pursues legal action to protect its copyrights and wins, either through a settlement or a court decision, the financial benefits go exclusively to Cinnaholic.
This policy is fairly standard in franchising, as the franchisor owns the intellectual property and is responsible for its protection. While Cinnaholic is not obligated to participate in the franchisee's defense or indemnify them in proceedings involving confidential information or common law rights, Cinnaholic may choose to reimburse the franchisee for liabilities and reasonable costs incurred in defending Cinnaholic's confidential information and other information in which they claim common law rights and copyright protection.
This arrangement underscores the importance of franchisees adhering strictly to Cinnaholic's guidelines and protecting its intellectual property. Franchisees benefit from the brand's trademarks and copyrighted materials, but they must also acknowledge that Cinnaholic maintains ultimate control over these assets and any legal actions related to them. Franchisees should be aware that they bear the responsibility of protecting Cinnaholic's confidential information and may face legal action from Cinnaholic if there is unauthorized use of confidential information or trade secrets through them or their employees.