What rights does Deer Solution have if a franchisee is sued for trademark infringement and seeks indemnification?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is sued in a legal proceeding or is threatened with legal action and/or a notice of infringement by a third party where the claims and/or causes of action directly relate to a third party claiming trademark infringement, unfair competition, and/or trademark dilution as a result of Franchisee's use of the Licensed Marks in accordance with the terms of this Agreement and the System (the "IP Claim"), then Franchisor shall indemnify Franchisee for the reasonable and direct costs incurred by Franchisee and/or a judgment entered against Franchisee, provided: (i) Franchisee immediately notified Franchisor of the IP Claim by a written notice sent to Franchisor via priority overnight courier; (ii) Franchisee provided and afforded Franchisor the absolute opportunity and right to defend against the IP Claim and to select and appoint legal counsel of Franchisor's choosing; and (iii) Franchisee utilized the Licensed Marks in accordance with the terms of this Agreement and the System. Franchisee agrees that time is of the essence with respect to notifying Franchisor of the IP Claim in accordance with this Agreement, including this Article 11.E.
Source: Item 23 — RECEIPTS (FDD pages 55–246)
What This Means (2025 FDD)
According to Deer Solution's 2025 Franchise Disclosure Document, if a franchisee faces a legal claim related to trademark infringement, unfair competition, or trademark dilution due to their use of Deer Solution's Licensed Marks, Deer Solution may be required to indemnify the franchisee. This obligation arises only if the franchisee has used the Licensed Marks in accordance with the franchise agreement and the Deer Solution system.
However, Deer Solution's obligation to indemnify is contingent upon the franchisee fulfilling certain requirements. The franchisee must immediately notify Deer Solution of the IP Claim through written notice sent via priority overnight courier. Furthermore, the franchisee must provide Deer Solution with the absolute right and opportunity to defend against the IP Claim, including the ability to select and appoint legal counsel of Deer Solution's choosing.
If these conditions are met, Deer Solution will cover the reasonable and direct costs incurred by the franchisee, as well as any judgment entered against them. This indemnification clause protects franchisees from legal expenses arising from their authorized use of Deer Solution's trademarks, but it also places a responsibility on the franchisee to promptly inform Deer Solution and allow them to control the legal defense.