Is Crave Cookies required to participate in the defense of a franchisee in a copyright infringement proceeding?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
ARTICLE 12. MARKS
- 12.1 Authorized Marks. Franchisee shall use no trademarks, service marks or logos in connection with the Business other than the Marks. Franchisee shall use all Marks specified by Crave Cookies Franchising, and only in the manner as Crave Cookies Franchising may require. Franchisee has no rights in the Marks other than the right to use them in the operation of the Business in compliance with this Agreement. All use of the Marks by Franchisee and any goodwill associated with the Marks, including any goodwill arising due to Franchisee's operation of the Business, will inure to the exclusive benefit of Crave Cookies Franchising.
- 12.2 Change of Marks. Crave Cookies Franchising may add, modify, or discontinue any Marks to be used under the System. Within a reasonable time after Crave Cookies Franchising makes any such change, Franchisee must comply with the change, at Franchisee's expense.
12.3 Infringement.
- (a) Defense of Franchisee. If Franchisee has used the Marks in accordance with this Agreement, then (i) Crave Cookies Franchising shall defend Franchisee (at Crave Cookies Franchising's expense) against any Action by a third-party alleging infringement by Franchisee's use of a Mark, and (ii) Crave Cookies Franchising will indemnify Franchisee for expenses and damages if the Action is resolved unfavorably to Franchisee.
- (b) Infringement by Third Party. Franchisee shall promptly notify Crave Cookies Franchising if Franchisee becomes aware of any possible infringement of a Mark by a third party. Crave Cookies Franchising may, in its sole discretion, commence or join any claim against the infringing party.
- (c) Control. Crave Cookies Franchising shall have the exclusive right to control any prosecution or defense of any Action related to possible infringement of or by the Marks.
- 12.4 Name. If Franchisee is an entity, it shall not use the word[s] "Crave Cookies" or any confusingly similar words in its legal name.
Source: Item 14 — PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION (FDD pages 32–33)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, under specific conditions, Crave Cookies is obligated to defend a franchisee in a third-party action alleging trademark infringement. Specifically, if the franchisee has used the Marks in accordance with the Franchise Agreement, Crave Cookies will defend the franchisee at its own expense. Furthermore, Crave Cookies will indemnify the franchisee for expenses and damages if the action is resolved unfavorably to the franchisee. This obligation is limited to actions related to the franchisee's use of the Marks.
This defense and indemnification obligation provides a significant benefit to the franchisee, as it protects them from potentially substantial legal costs and damages associated with trademark infringement claims. However, it's crucial to note that this protection is conditional. The franchisee must have used the Marks strictly in accordance with the requirements outlined in the Franchise Agreement. Any deviation from these requirements could void Crave Cookies' obligation to defend and indemnify the franchisee.
The FDD also states that the franchisor has the exclusive right to control any prosecution or defense of any action related to possible infringement of or by the Marks. This means that while Crave Cookies is responsible for the defense, they also maintain control over the legal strategy and decisions. The franchisee is required to promptly notify Crave Cookies if they become aware of any possible infringement of a Mark by a third party, allowing Crave Cookies to take appropriate action.
This arrangement is fairly typical in franchising, as franchisors have a vested interest in protecting their trademarks and ensuring consistent brand representation. By taking responsibility for infringement defense when the franchisee adheres to the agreement, Crave Cookies can maintain brand integrity and reduce the risk of inconsistent or inadequate legal responses by individual franchisees. Franchisees should carefully review the terms and conditions related to trademark usage in the Franchise Agreement to ensure they comply and remain eligible for this protection.