Under what conditions will Cool Binz indemnify a franchisee for alleged patent infringement?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event of any infringement of, or challenge to, your use of the patent, you must immediately notify us, and we will have sole discretion to take such action as deemed appropriate. We will indemnify and hold you harmless from any suits, proceedings, demands, obligations, actions or claims, including costs and reasonable attorneys' fees, for any alleged infringement under federal or state patent law arising solely from your conforming use of the patent in accordance with the Franchise Agreement or as otherwise set forth by us in writing, if you have notified us promptly of the claim. We reserve the right, under the Franchise Agreement, to discontinue your use of the Patent. The franchise agreement does not provide you with any right to compensation if you are required to modify or discontinue use of the patent.
Source: Item 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 50–52)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, Cool Binz will indemnify a franchisee against patent infringement claims if the claim arises solely from the franchisee's conforming use of the patent in accordance with the Franchise Agreement or as otherwise set forth by Cool Binz in writing. The franchisee must also promptly notify Cool Binz of the claim. This indemnification covers suits, proceedings, demands, obligations, actions, or claims, including costs and reasonable attorneys' fees.
However, Cool Binz retains sole discretion to take action it deems appropriate in response to any infringement or challenge to the patent's use. Cool Binz also reserves the right to discontinue the franchisee's use of the patent, and the franchise agreement does not provide the franchisee with any right to compensation if they are required to modify or discontinue use of the patent.
This type of indemnification is relatively standard in franchising. It aims to protect franchisees from intellectual property lawsuits as long as they follow the franchisor's guidelines. However, the franchisee bears the risk of losing the right to use the patent without compensation, which could impact their business if the patented technology is integral to their operations.