Is Circle K obligated to participate in a franchisee's defense or indemnify them against infringement claims?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
2.6.2 TMC Intellectual Property Indemnification
- 2.6.2.1 TMC shall defend, or at its option settle, and indemnify Franchisee from and against any and all Claims that Franchisee may incur on the direct infringement or alleged direct infringement of any United States copyright of a third party as a result of Franchisee's authorized exercise of a TMC Software license granted to Franchisee by TMC herein; provided, that, (i) Franchisee gives TMC prompt written notice of such Claim, (ii) Franchisee gives TMC full authority to defend or settle any such Claim, (iii) Franchisee gives TMC proper and full information and assistance, at TMC's reasonable expense (except for Franchisee's employees' time) to defend or settle any such Claim, and (iv) Franchisee is not in breach of this Agreement (including without limitation the use restrictions set forth herein). Should Franchisee desire to have its own counsel participate in any such Claim, the cost of such counsel shall be born exclusively by Franchisee. TMC shall not be responsible for any costs or expenses incurred without its prior written consent.
- 2.6.2.2 If there is a Claim made or threatened, TMC may, at its expense and option, either, (i) procure the right to continue using any part of the TMC Software, (ii) replace the TMC Software with non-infringing items that are substantially similar in functionality (iii) modify the TMC Software so that it is non-infringing, or (iv) refund the Software License Fees paid by Franchisee for the current term of this Agreement.
- 2.6.2.3 Notwithstanding the foregoing provisions of this Section 2.6.2, TMC assumes no liability for (i) infringements covering any Equipment or software, method or process in which the TMC Software may be used but not covered in the TMC Software when used alone, (ii) infringements involving the modifications or servicing of the TMC Software or any part thereof, unless done by TMC, or (iii) if Franchisee is in breach of this Agreement (including without limitation the use restrictions set forth herein) or is in material breach of the Franchise Agreement.
Source: Item 14 — PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION (FDD pages 76–77)
What This Means (2025 FDD)
According to the 2025 Circle K Franchise Disclosure Document, Circle K's Technology Management Company (TMC) provides some intellectual property indemnification to franchisees. TMC will defend or settle claims against the franchisee for direct copyright infringement of a third party in the United States, provided the franchisee is using TMC Software under the granted license.
Specifically, Circle K franchisees must promptly notify TMC in writing of any claim, give TMC full authority to defend or settle the claim, and provide proper information and assistance at TMC's expense (excluding the franchisee's employees' time). The franchisee must not be in breach of the franchise agreement or the use restrictions. If the franchisee wants their own counsel, they bear that cost. TMC isn't responsible for costs incurred without its written consent.
TMC has the option to secure the right to continue using the software, replace it with non-infringing software of similar functionality, modify the software to be non-infringing, or refund the software license fees paid by the franchisee for the current term. However, TMC isn't liable for infringements involving equipment, software, methods, or processes not covered in the TMC Software when used alone, or for infringements involving modifications or servicing of the software unless done by TMC, or if the franchisee breaches the agreement.