Under what conditions will Cool Binz indemnify a franchisee against losses related to trademark infringement claims?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
You must notify us immediately of any apparent infringement or challenge to your use of any Mark, or of any claim by any person of any rights in any Mark, and not to communicate with any person other than us and our attorneys, and your attorneys, in any infringement, challenge, or claim.
Provided that you have timely notified us of the claim or proceeding and complied with the Franchise Agreement as we determine in our sole discretion, we shall indemnify and hold you harmless against any loss or expense incurred in connection with any such infringement, challenge or claim. If we, in our sole discretion, determine that you have not used the Marks in accordance with the Franchise Agreement, you will bear the cost of such defense, including the cost of any judgment or settlement. You must sign any and all instruments and documents, render the assistance, and do the acts and things that, in the opinion of our attorneys, may be necessary or advisable to protect and maintain our interests in any litigation or USPTO or other proceeding, or otherwise to protect and maintain our interest in the Marks, including, without limitation, becoming a nominal party to any legal action. Except to the extent that such litigation is the result of your use of the Marks in a manner inconsistent with the terms of the Franchise Agreement, we agree to reimburse you for your out-of-pocket costs in performing such acts.
If it becomes advisable at any time in our sole discretion to modify or discontinue the use of any Mark and/or use one or more additional or substitute names or marks, you must comply with our direction no later than ten days after you have received notice. We will not be liable to you for any expenses, losses, or damages you sustain as the result of any such addition, modification, substitution, or discontinuance of a Mark and you must not commence or join in any litigation or other proceeding against us for any such expenses, losses, or damages.
Source: Item 13 — TRADEMARKS (FDD pages 49–50)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, Cool Binz will indemnify a franchisee against losses or expenses from trademark infringement claims if the franchisee adheres to specific conditions. The franchisee must promptly notify Cool Binz of any claim or proceeding and comply with the Franchise Agreement, as determined by Cool Binz. If these conditions are met, Cool Binz will protect the franchisee from any losses or expenses tied to the infringement claim.
However, if Cool Binz determines, at its sole discretion, that the franchisee did not use the trademarks in accordance with the Franchise Agreement, the franchisee will be responsible for the costs of defending against the claim. This includes covering any judgment or settlement costs. Therefore, it is critical for a Cool Binz franchisee to adhere to the trademark usage guidelines outlined in the Franchise Agreement to ensure they are protected in case of an infringement claim.
Furthermore, the franchisee is obligated to sign documents and provide assistance necessary to protect Cool Binz's interests in any litigation or proceedings. Cool Binz will reimburse the franchisee for reasonable out-of-pocket costs incurred while performing these actions, unless the litigation arises from the franchisee's inconsistent use of the trademarks with the Franchise Agreement. This arrangement is fairly typical in franchising, as franchisors need to protect their brand's trademarks while also ensuring franchisees use them correctly.
Cool Binz retains the right to modify or discontinue the use of any trademark, and franchisees must comply with these changes within ten days of receiving notice. Cool Binz is not liable for any expenses, losses, or damages the franchisee incurs due to these changes, and the franchisee cannot take legal action against Cool Binz for such issues. This highlights the importance of franchisees understanding that trademark usage can evolve and that they must remain adaptable to these changes.