Is the Exit franchisee allowed to infringe on Exit's rights in the Proprietary Marks?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
ed a trustee or fiduciary with respect to any of the Funds, and no such fiduciary or trust relationship is created hereby.
8. PROPRIETARY MARKS
8.1. Grant of Non-Exclusive License of Proprietary Marks to Franchisee
(A) Subfranchisor, having been granted the right to do so by EXIT, grants to Franchisee, and Franchisee accepts, a non-exclusive license to use the Proprietary Marks (as defined in Section 43), for the purpose of operating
a Franchise pursuant to the terms and conditions of this Agreement, and for no other purpose. Subfranchisor and Franchisee expressly agree that ownership, right and title to the Proprietary Marks, regardless of source, are automatically vested in and shall remain solely and exclusively the property of EXIT, and are provided to Franchisee by Subfranchisor in confidence. Franchisee agrees to keep all of the Proprietary Marks in confidence, not infringe on EXIT's rights in the Proprietary Marks, not use them in any manner unless expressly authorized by EXIT, and not disclose them without the prior written consent of Subfranchisor, except as provided in this Agreement. This license is contemporaneous and coterminous with this Agreement and is granted solely in the context of this Agreement. Franchisee shall only use the Proprietary Marks with the SM, TM or ® symbols and designations, as applicable.
(B) Franchisee understands and agrees that its license to use the Proprietary Marks is non-exclusive. EXIT in its sole discretion has the right to grant franchises or licenses to others and to license to others the right to use the Proprietary Marks in addition to those franchises and licenses already granted to other franchisees and subfranchisors. EXIT may develop and license other marks in conjunction with systems other than the EXIT System, on any terms and conditions EXIT deems advisable.
8.2. Substitution; Modification
EXIT reserves the right to modify the System or any part of the System at any time, if EXIT, in its sole discretion, determines that the modification will be beneficial to the System, and as changed, it shall remain the System referred to in this Agreement. Any improvements in the System that may be developed or proposed by Franchisee, its employees or agents ("Improvements") shall become the sole and exclusive property of EXIT, who shall have the right to adopt and perfect them without compensation to Franchisee. At EXIT's request, Franchisee, or its employees or agents shall assign any and all rights in Improvements to EXIT.
8.3. Tender of Defense
If Franchisee is named as a defendant or party in any action involving the Proprietary Marks or System and if Franchisee is named as a defendant or party solely because the plaintiff or claimant is alleging that Franchisee does not have the right to use the Proprietary Marks or System, then Franchisee shall tender the defense of the action to Subfranchisor and Subfranchisor or EXIT will defend Franchisee in the action provided Franchisee has tendered the action to Subfranchisor within seven (7) days after receiving service of the pleadings or the Summons and Complaint involving the action.
8.4. Adverse Claims to Proprietary Marks; Infringements
- (A) Franchisee shall promptly notify Subfranchisor of any claim, demand, or suit based upon or arising out of any attempt by any other person, firm, or corporation to use the Proprietary Marks, or any colorable variation of the Proprietary Marks. Franchisee agrees also to promptly notify Subfranchisor of any litigation instituted by any person, firm corporation, or governmental agency against EXIT, Subfranchisor, or any franchisee, involving the Proprietary Marks.
- (B) 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.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, franchisees are explicitly prohibited from infringing on Exit's rights in its proprietary marks. The franchise agreement grants franchisees a non-exclusive license to use these marks solely for operating their franchise under the agreement's terms. Exit retains exclusive ownership and title to the proprietary marks, ensuring franchisees cannot use them in any unauthorized manner. Franchisees must also maintain the confidentiality of these marks. This non-exclusive license allows Exit to grant further licenses to others and develop other marks for different systems. The Proprietary Marks include the trade names, trademarks, service marks, logos, emblems, and signs, including improvements and modifications, which are adopted and used by EXIT as part of the EXIT System which are designated as confidential, and confidential programs, materials, and information which are part of the System.
Exit franchisees must actively protect and promote the trade name, service mark, and overall system, reporting any potential imitations or infringements. Franchisees also acknowledge that any goodwill associated with the proprietary marks, even if resulting from the franchisee's efforts, belongs exclusively to Exit. Upon termination of the franchise agreement, no monetary value is assigned to the franchisee for their use of the proprietary marks. Franchisees are also prohibited from contesting the validity or ownership of Exit's proprietary marks, ensuring Exit's rights are not prejudiced.
To maintain consistent standards and protect Exit's reputation, franchisees must adopt any changes to the proprietary marks or training manuals at their own expense. They also need prior written approval from the subfranchisor for any use of the trade name and logo that incorporates the franchisee's name or other identifying words. This ensures uniformity and prevents unauthorized use of Exit's branding. Franchisees are required to notify the Subfranchisor of any claims or suits arising from attempts by others to use the Proprietary Marks, and must report any likely infringements of the Proprietary Marks to Subfranchisor and shall assist Subfranchisor or EXIT in resolving conflicts, without reimbursement or remuneration.