Who has the right to exclusively control litigation arising out of infringement of the Marks for City Publications?
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, City Publications, at its option, may defend and control the defense of any legal proceeding arising directly from a franchisee's authorized use of any Mark. However, this does not obligate City Publications to cover the expense to the franchisee of removing signage or discontinuing the use of the Marks.
This condition does not apply to litigation between City Publications and a franchisee where the franchisee's use of the Marks is disputed or challenged by City Publications. Additionally, franchisees are not entitled to indemnification for any separate legal fees or costs they incur by seeking independent counsel, apart from the counsel representing both City Publications and the franchisee, in the event of litigation disputing the use of the Marks. The franchisee also has no right to indemnification if it chooses to use separate counsel from City Publications in defense of this type of litigation.
In practical terms, this means that if a third party sues a City Publications franchisee for trademark infringement based on the franchisee's authorized use of City Publications' Marks, City Publications has the option to take over the defense of the lawsuit. If City Publications chooses to do so, it will control the litigation. However, the franchisee may still bear some expenses, such as the cost of changing signage. The franchisee should note that they will not be reimbursed for independent legal counsel if they choose to hire their own attorney separately from City Publications' counsel.