Who has the right to control any litigation involving Exit's Proprietary Information?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Although EXIT does not own federally determined rights in copyright materials and has not filed an Application for Copyright Registration for the Training Manuals, the information in the Training Manuals is proprietary, and EXIT claims a copyright to the entire Training Manuals and in various advertising and sales promotion materials used in connection with the EXIT System. You may not copy any of EXIT's confidential information or give it to a third party, except as EXIT authorizes. You must also promptly tell us when you learn about unauthorized use of this Proprietary Information. EXIT Realty Upper Midwest is not obligated to take any action but will respond to this information as we think appropriate. EXIT has the right to control any litigation involving Proprietary Information. EXIT or EXIT Realty Upper Midwest will defend you for claims by a third party concerning your use of this Proprietary Information.
Source: Item 14 — PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION (FDD page 27)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, Exit has the right to control any litigation involving its Proprietary Information. The FDD also states that Exit or Exit Realty Upper Midwest will defend the franchisee for claims by a third party concerning the franchisee's use of this Proprietary Information.
This means that if a legal dispute arises regarding the use of Exit's protected information, Exit maintains the authority to direct the legal strategy and proceedings. As a franchisee, you would be defended by Exit or Exit Realty Upper Midwest if a third party claims your use of Exit's Proprietary Information is unlawful.
This is a significant benefit for franchisees, as it relieves them of the burden and expense of managing complex litigation related to intellectual property. However, it also means franchisees must adhere to Exit's directives in any such legal matter. Franchisees are obligated to promptly inform Exit of any unauthorized use of Proprietary Information, allowing Exit to take appropriate action. This clause ensures that Exit can protect its brand and system while providing legal support to its franchisees.