Under what condition will Exit defend a franchisee in an action involving the Proprietary Marks or System?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, Exit (or its subfranchisor) will defend a franchisee in legal actions involving the Proprietary Marks or System under specific conditions. If a franchisee is named as a defendant in a lawsuit because the plaintiff alleges the franchisee lacks the right to use Exit's Proprietary Marks or System, Exit may provide a defense.
However, this defense is contingent on the franchisee promptly tendering the action to the subfranchisor. The franchisee must notify the subfranchisor within seven days of receiving the legal pleadings (Summons and Complaint). This strict deadline emphasizes the importance of franchisees acting quickly to involve Exit in any potential legal disputes concerning the brand's intellectual property.
This requirement protects Exit by ensuring they have timely control over legal challenges to their brand. By mandating prompt notification, Exit can assess the situation, develop a legal strategy, and protect the overall integrity of the Exit system. Franchisees should be aware of this requirement and have systems in place to ensure they can meet the seven-day deadline to secure Exit's support in defending against such claims.