What is City Publications' right regarding the defense of a proceeding arising from the franchisee's use of any mark?
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 has the option to defend and control the defense of any legal proceeding that arises directly from the franchisee's authorized use of any of City Publications' marks.
This means that if a third party sues a City Publications franchisee for trademark infringement related to the franchisee's authorized use of the City Publications marks, City Publications has the right to take over the defense of the lawsuit. This can be beneficial for the franchisee because City Publications has more experience with these types of legal matters and may be able to obtain a better outcome than the franchisee could on their own.
However, the franchisee must promptly notify City Publications of any such proceeding and comply with the franchise agreement and City Publications' directions in responding to it. The franchisee is entitled to reimbursement for reasonable expenses incurred in the proceeding, excluding costs for removing signage or discontinuing mark usage. The franchisee does not have the right to indemnification if they choose to use separate counsel from City Publications.
This arrangement is fairly typical in franchising, as franchisors have a strong interest in protecting their trademarks and ensuring consistent defense strategies across their franchise system. Franchisees should carefully consider these provisions and understand their obligations and limitations regarding legal defense in trademark matters.