Does the City Publications indemnification cover separate legal fees incurred by the franchisee for independent counsel in a trademark dispute?
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.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the franchisor's indemnification does not cover separate legal fees incurred by the franchisee for independent counsel in a trademark dispute. Specifically, if a franchisee chooses to seek legal representation separate from the counsel representing both City Publications and the franchisee in litigation concerning the use of trademarks, the franchisee will not be reimbursed for those independent legal costs.
This means that while City Publications may offer to defend a franchisee in a trademark dispute, the franchisee bears the financial responsibility if they opt to hire their own attorney instead of using the franchisor's counsel. This could occur if the franchisee feels the franchisor's counsel has a conflict of interest or is not adequately representing their specific interests.
This is a critical point for potential City Publications franchisees to consider. While the franchisor offers some protection through indemnification, that protection has limits. Franchisees need to assess their comfort level with potentially bearing the full cost of independent legal representation in a trademark dispute, even if the dispute arises from the franchisee's authorized use of City Publications' marks.