Who bears the costs of prosecuting infringements of the Proprietary Marks for Exit, if the Subfranchisor undertakes the prosecution?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall promptly report all likely infringements of the Proprietary Marks to Subfranchisor and shall assist Subfranchisor or EXIT in resolving conflicts, without reimbursement or remuneration. Subfranchisor will investigate likely infringements and will undertake such efforts to protect the Proprietary Marks as it deems reasonable and appropriate. Subfranchisor, at its sole option, may undertake the prosecution of any such infringements and shall bear all costs of any such prosecution, except as otherwise provided in this Agreement.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the Subfranchisor bears the costs of prosecuting infringements of the Proprietary Marks if they undertake the prosecution. The document specifies that the Subfranchisor has the option to prosecute infringements they deem reasonable and appropriate.
This means that as an Exit franchisee, you are not directly responsible for the legal expenses associated with protecting the brand's trademarks. However, you are obligated to report any potential infringements to the Subfranchisor and assist in resolving conflicts. This assistance is expected without direct reimbursement or remuneration.
This arrangement protects franchisees from unexpected legal costs, as the Subfranchisor assumes the financial burden of trademark protection. However, the Subfranchisor retains sole discretion over whether to pursue legal action, which means that not all reported infringements may be prosecuted. Franchisees in Minnesota have additional protections, where the Subfranchisor will protect the Franchisee's right to use the Proprietary Marks and/or indemnify Franchisee from any loss, costs or expenses arising out of any claim, suit or demand regarding use of the Proprietary Marks.