Can the Intercompany License Agreement between Ella Cafe and Cool Coffee be modified unilaterally?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
Cool Coffee, our affiliate, owns the trademarks described in this Item. Under an Intercompany License Agreement between us and Cool Coffee, we have been granted the exclusive right to sublicense the trademarks to franchisees throughout the United States. The agreement is of perpetual duration. It may be modified only by mutual consent of the parties. It may be canceled by our affiliate only if (1) we materially misuse the trademarks and fail to correct the misuse, or (2) we discontinue commercial use of the trademarks for a continuous period of more than one year. The Intercompany License Agreement specifies that if it is ever terminated, your franchise rights will remain unaffected. We know of no other agreements currently in effect which significantly limit our rights to use or license the use of the Marks in any manner material to you.
Source: Item 13 — TRADEMARKS (FDD pages 35–38)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the Intercompany License Agreement between Ella Cafe and its affiliate, Cool Coffee, which grants Ella Cafe the exclusive right to sublicense trademarks to franchisees, cannot be modified unilaterally. The FDD specifies that the agreement, which is of perpetual duration, may be modified only by mutual consent of both Ella Cafe and Cool Coffee.
This stipulation protects franchisees because it ensures that the terms under which Ella Cafe can use and sublicense the trademarks cannot be altered without the agreement of both parties involved. This prevents Cool Coffee from unilaterally changing the terms of the agreement in a way that could negatively impact Ella Cafe's franchisees.
However, the Intercompany License Agreement can be canceled by Cool Coffee if Ella Cafe materially misuses the trademarks and fails to correct the misuse, or if Ella Cafe discontinues commercial use of the trademarks for a continuous period of more than one year. Despite these cancellation conditions, the agreement specifies that if it is ever terminated, the franchisee's rights will remain unaffected, providing a level of security for the franchisee's continued operation under the Ella Cafe brand. Prospective franchisees should confirm with Ella Cafe how they would be supported in the event of a trademark dispute.