What are the limitations on Crown Gold Exchange's obligation to protect a franchisee's right to use the trademarks?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
We protect your right to use the principal trademarks listed in this Item, and we protect you against claims of infringement or unfair competition arising out of your use of the trademarks, to the extent described in this section.
The franchise agreement obligates you to notify us of the use of, or claims of rights to, a trademark identical to or confusingly similar to a trademark licensed to you. The franchise agreement does not require us to take affirmative action when notified of these uses or claims. We have the right to control any administrative proceedings or litigation involving a trademark licensed by us to you.
If you use our trademarks in accordance with the franchise agreement, then (i) we will defend you (at our expense) against any legal action by a third-party alleging infringement by your use of the trademark, and (ii) we will indemnify you for expenses and damages if the legal action is resolved unfavorably to you.
Under the franchise agreement, we may require you to modify or discontinue using a trademark, at your expense.
Source: Item 13 — TRADEMARKS (FDD pages 26–27)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, while Crown Gold Exchange states they protect a franchisee's right to use their trademarks, there are limitations to this obligation. Franchisees are obligated to notify Crown Gold Exchange of any identical or confusingly similar trademark uses or claims. However, Crown Gold Exchange is not required to take any action after being notified. Crown Gold Exchange retains the right to control any administrative or legal proceedings involving a trademark licensed to the franchisee.
Crown Gold Exchange will defend a franchisee against legal action from a third party alleging trademark infringement if the franchisee uses the trademarks according to the franchise agreement. Crown Gold Exchange will also cover expenses and damages if the legal action is resolved against the franchisee. However, Crown Gold Exchange can require a franchisee to modify or stop using a trademark, and the franchisee will bear the expense of doing so.
These stipulations mean that while Crown Gold Exchange offers some protection, the franchisee may still incur costs and be forced to change their branding at their own expense. The fact that Crown Gold Exchange is not obligated to act on a franchisee's notification of potentially infringing uses places more responsibility on the franchisee to monitor and potentially address trademark issues themselves. This is a fairly typical arrangement in franchising, where the franchisor provides some support but ultimately the franchisee has to take an active role in protecting the brand at their location.