What is the dependency between the franchisee's use of the Marks and City Publications' obligation to reimburse defense costs?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor shall reimburse Franchisee for all expenses reasonably incurred by Franchisee in any trademark or similar proceeding disputing Franchisee's authorized use of any Mark, provided that Franchisee has timely notified Franchisor of such proceeding and has complied with this Agreement and Franchisor's directions in responding to such proceeding. At Franchisor's option, Franchisor may defend and control the defense of any proceeding arising directly from Franchisee's use of any Mark. This indemnification shall not include the expense to Franchisee of removing signage or discontinuance of the use of the Marks. This Section 7 is not applicable to litigation between Franchisor and Franchisee wherein Franchisee's use of the Marks are disputed or challenged by Franchisor. This Section 7(D) is not applicable to any separate legal fees or costs incurred by Franchisee in seeking independent counsel, separate from the counsel representing Franchisor and Franchisee in the event of litigation disputing Franchisor and Franchisee's use of the Marks. Franchisee also has no right of indemnification in the event it determines to use separate counsel from Franchisor in defense of the type of litigation described herein. The Franchisee will receive a logo and formats for use in the Franchise. All material using the logo or Exclusive marks and are used to market or promote the Franchise or its products must be produced in accordance with the operating manual.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, City Publications will reimburse a franchisee for expenses incurred in a trademark dispute regarding the franchisee's authorized use of City Publications' marks, provided the franchisee meets certain conditions. Specifically, the franchisee must notify City Publications of the proceeding in a timely manner and comply with the franchise agreement and City Publications' directions in responding to the proceeding.
However, City Publications has the option to defend and control the defense of any proceeding arising directly from the franchisee's use of any mark. The reimbursement does not extend to the franchisee's expenses for removing signage or discontinuing the use of the marks.
It's important to note that this reimbursement provision does not apply to litigation between City Publications and the franchisee where the franchisee's use of the marks is disputed or challenged by City Publications. Additionally, the franchisee is not entitled to reimbursement for separate legal fees if they choose to seek independent counsel instead of using the counsel representing both City Publications and the franchisee. The franchisee must use the logo and formats provided and adhere to the operating manual when marketing or promoting the franchise using the marks.