What are the exceptions to GIFT's obligation to indemnify a Dq Treat Operated Location, Participating Franchisee, or Sub-Franchisee for intellectual property infringement claims?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
GIFT agrees to indemnify Operated Locations, Participating Franchisee or Sub-Franchisee, its directors, officers, employees and agents from and against all third party claims, losses, liabilities and damages (including reasonable attorneys' fees and costs of settlement) resulting from or arising out of any allegation that GIFT's Software misappropriate or infringe such third party's U.S. copyright, trademark, patent or other intellectual property right, except to the extent that such allegation arises from (i) Operated Locations, Participating Franchisee or Sub-Franchisee's use of Software other than in compliance with this Agreement and any documentation supplied by GIFT, (ii) Operated Locations, Participating Franchisee or Sub-Franchisee's use of Software in combination with other software, equipment, systems, services, processes, components or elements not provided by GIFT, if the infringement or misappropriation would not have occurred but for such use or combination, or (iii) modifications or development requested by Client or Operated Locations, Participating Franchisee or Sub-Franchisee, using designs, instructions or specifications provided or approved by Client or Operated Locations, Participating Franchisee or Sub-Franchisee.
Source: Item 17 — The following paragraph is added to the end of Item 17 of the Disclosure Document: (FDD pages 70–378)
What This Means (2025 FDD)
According to Dq Treat's 2025 Franchise Disclosure Document, GIFT (First Data Resources, LLC) agrees to indemnify Dq Treat Operated Locations, Participating Franchisees, or Sub-Franchisees against third-party claims of intellectual property infringement related to GIFT's software. However, this indemnification is subject to certain exceptions.
Specifically, GIFT is not obligated to indemnify a Dq Treat franchisee if the infringement claim arises from (i) the franchisee's use of the software in a way that does not comply with the Participation Agreement or GIFT's documentation, (ii) the franchisee's use of the software in combination with other software, equipment, systems, services, processes, components, or elements not provided by GIFT, where the infringement would not have occurred without this combination, or (iii) modifications or development requested by the franchisee using designs, instructions, or specifications they provided or approved.
These exceptions mean that Dq Treat franchisees bear the risk of intellectual property claims if they deviate from GIFT's specified use of the software or integrate it with non-approved elements. It is important for prospective franchisees to understand these limitations and ensure they adhere to GIFT's guidelines to maintain indemnification coverage. Franchisees should seek clarification from Dq Treat and GIFT regarding approved software uses and integrations to minimize their risk of intellectual property infringement claims.