Who has the right to control legal proceedings involving a Desi District trademark licensed to a franchisee?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
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 40–42)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, Desi District retains the right to control any administrative proceedings or litigation involving a trademark that it licenses to its franchisees. This means that while franchisees are obligated to notify Desi District of any identical or confusingly similar trademark uses or claims, Desi District is not required to take any action upon receiving such notification.
This control is significant for prospective franchisees because it means Desi District will make the strategic decisions regarding trademark protection, not the franchisee. While franchisees must inform Desi District of potential trademark issues, they do not have the authority to independently pursue legal action to protect the brand.
However, Desi District also commits to defending franchisees against legal actions by third parties alleging trademark infringement due to the franchisee's use of the trademark, provided the franchisee uses the trademarks in accordance with the franchise agreement. Desi District will cover the expenses for this defense and indemnify the franchisee for expenses and damages if the legal action results unfavorably for the franchisee. This protection offers a degree of security for franchisees, as long as they adhere to the franchise agreement's terms regarding trademark usage. Desi District may also require a franchisee to modify or discontinue using a trademark, at the franchisee's expense.