Who has the right to select counsel for an IP Claim defense for Dickeys Barbecue Pit?
Dickeys_Barbecue_Pit Franchise · 2024 FDDAnswer from 2024 FDD Document
10.1 Subject to the provisions of Section 10.4 below for patent claims, Spark will, at its expense, defend you against any IP Claim. Spark will also pay the damages, costs, and attorneys' fees that are awarded against you in a final, non-appealable court judgment for the IP Claim, or required to be paid by you or on your behalf in a settlement of the IP Claim that Spark has agreed to in writing. As used in this section, an "IP Claim" means a suit brought against you by a third party to the extent the suit alleges that your use of a Product infringes a valid U.S. patent or copyright of the third party.
10.2 Spark's obligations set forth in this section are subject to your: (a) providing Spark prompt written notice that the IP Claim has been threatened or brought, whichever is sooner (the "Claim Notice"); (b) providing Spark exclusive control of the defense, appeal and/or settlement of the IP Claim; (c) cooperating with Spark with respect to the defense, appeal, and/or settlement; and (d) complying with all court orders. If your delay in providing the Claim Notice causes detriment to Spark with respect to the defense or resolution of the IP Claim, the obligations set forth in this section will not apply to the IP Claim. Notwithstanding any other provision of these Terms and Conditions, Spark is not responsible for any fees (including attorneys' fees), expenses, costs, judgments, or awards that are incurred prior to Spark's receipt of the Claim Notice from Customer. Spark will have the exclusive right to select counsel. Customer may, at Customer's sole expense, engage additional counsel of Customer's choosing for purposes of conferring with Spark's counsel.
Source: Item 23 — RECEIPTS (FDD pages 96–388)
What This Means (2024 FDD)
According to Dickey's Barbecue Pit's 2024 Franchise Disclosure Document, Spark, not the franchisee, has the exclusive right to select counsel for the defense of an IP Claim. An "IP Claim" refers to a lawsuit brought against the franchisee by a third party alleging infringement of a valid U.S. patent or copyright through the use of a Product. However, the franchisee has the option to engage additional counsel at their own expense for the purpose of consulting with Spark's counsel.
This means that while Dickey's Barbecue Pit franchisees are responsible for promptly notifying Spark of any threatened or filed IP Claims and cooperating with Spark in the defense, appeal, or settlement of the claim, Spark maintains control over the legal strategy and representation. This is subject to the franchisee providing prompt written notice of the claim. Delay in providing notice that causes detriment to Spark could void Spark's obligations.
This arrangement benefits the franchisee by providing them with a defense against IP claims at no cost, as Spark will cover the expenses, damages, costs, and attorney's fees associated with the claim. However, the franchisee must relinquish control of the legal proceedings to Spark. The franchisee can hire their own attorney to confer with Spark's counsel, but they must pay for it themselves. This ensures a unified legal strategy while allowing the franchisee to have additional legal advice.
It is important for prospective Dickey's Barbecue Pit franchisees to understand that Spark is not responsible for any fees, expenses, costs, judgments, or awards incurred before receiving the Claim Notice from the franchisee. Therefore, prompt communication is crucial in the event of an IP Claim to ensure coverage under the franchise agreement.