What are the exceptions to Dq Treat's GIFT's obligation to indemnify Operated Locations, Participating Franchisee or Sub-Franchisee for intellectual property 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 Operated Locations, Participating Franchisees, or Sub-Franchisees against third-party claims related to the misappropriation or infringement of U.S. intellectual property rights by GIFT's software. However, this indemnification is subject to certain exceptions.
GIFT is not obligated to indemnify Dq Treat franchisees if the 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 Client or 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 misuse the software, integrate it with non-approved systems, or request custom modifications that lead to infringement. Franchisees should ensure they adhere strictly to GIFT's guidelines and approved configurations to maintain the indemnification protection. This is a fairly standard practice in franchising, as franchisors typically want to control how their systems and intellectual property are used to protect their brand and avoid legal issues.