Is ADQ obligated to indemnify Dq Treat franchisees against infringement claims?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
ADQ is not obligated to protect your right to use the Trademarks, or to protect you against infringement or unfair competition claims arising out of your use of the Trademarks, or to participate in your defense or indemnify you. ADQ has the right to control any litigation related to the Trademarks and the right to decide to pursue or settle any infringement actions related to the Trademarks. You must notify ADQ promptly of any infringement or unauthorized use of the Trademarks of which you become aware and cooperate with any action that ADQ undertakes; however, ADQ is not required by the franchise agreement to take affirmative action when notified of such uses. If ADQ determines that a claim by a party that its rights to use the Trademarks are superior and requires changes or substitutions to the Trademarks, you must immediately make the changes or substitutions required by ADQ at your expense. You do not have any rights under the franchise agreement if ADQ requires you to modify or discontinue using a trademark.
Source: Item 14 — U***:** U**Patents, Copyrights, and Proprietary Information (FDD pages 50–51)
What This Means (2025 FDD)
According to the 2025 Dq Treat FDD, ADQ (American Dairy Queen Corporation) is not obligated to protect Dq Treat franchisees against infringement or unfair competition claims arising from the use of trademarks. This means that if a franchisee is sued for using a trademark in a way that allegedly infringes on someone else's rights, ADQ is not required to defend the franchisee or cover any resulting costs or damages.
Furthermore, ADQ retains control over any litigation related to the trademarks and has the right to decide whether to pursue or settle any infringement actions. While franchisees are required to promptly notify ADQ of any infringement or unauthorized use of the trademarks, ADQ is not obligated to take any specific action in response.
If ADQ determines that a third party's claim to trademark rights is superior and requires changes or substitutions to the trademarks, the franchisee must immediately comply with these changes at their own expense. The franchisee does not have any rights under the franchise agreement if ADQ requires them to modify or discontinue using a trademark. This could potentially lead to unexpected costs and disruptions for the franchisee's business operations.
This type of arrangement is not uncommon in franchising, where the franchisor owns the trademarks but often does not assume liability for the franchisee's use of those trademarks. Prospective Dq Treat franchisees should carefully consider these factors and potentially seek legal counsel to understand the full scope of their responsibilities and potential liabilities related to trademark use.