Under the Dq Treat Participation Agreement, what are the conditions under which an Operated Location, Participating Franchisee, or Sub-Franchisee must indemnify GIFT for intellectual property claims related to materials they supplied?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
Operated Locations, Participating Franchisee or Sub-Franchisee agrees to indemnify GIFT, 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 materials supplied by Client or Operated Locations, Participating Franchisee or Sub-Franchisee (including trademarks, artwork, designs and specifications) 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 GIFT's use of such materials other than in compliance with (a) this Agreement or (b) any relevant instructions supplied 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, the Participation Agreement outlines specific conditions under which an Operated Location, Participating Franchisee, or Sub-Franchisee is required to indemnify GIFT (First Data Resources, LLC) against third-party claims related to intellectual property. Specifically, the franchisee agrees to protect GIFT from any claims, losses, liabilities, and damages, including legal fees and settlement costs, that arise from allegations that materials they supplied infringe upon a third party's U.S. copyright, trademark, patent, or other intellectual property rights. This includes trademarks, artwork, designs, and specifications provided by the franchisee. This obligation is designed to protect GIFT from legal issues stemming from the franchisee's contributions to the program.
However, there are exceptions to this indemnification requirement. The franchisee is not responsible for indemnifying GIFT if the allegation arises from GIFT's use of the franchisee-supplied materials in a way that does not comply with the Participation Agreement or any relevant instructions provided by the franchisee. This means that if GIFT misuses the materials or deviates from the agreed-upon guidelines, the franchisee is not liable for any resulting intellectual property claims. This provision aims to ensure that franchisees are only responsible for the integrity of the materials they provide and not for how GIFT chooses to use them.
In practical terms, this means a Dq Treat franchisee needs to be diligent in ensuring that any materials they supply, such as marketing materials or designs, do not infringe on existing intellectual property rights. It is advisable for franchisees to conduct thorough due diligence on their materials and to adhere strictly to the guidelines and instructions provided by both Dq Treat and GIFT. Failure to do so could result in significant financial liabilities in the event of an intellectual property claim. Conversely, franchisees are protected if GIFT uses their materials improperly, highlighting the importance of clear communication and documentation of instructions.