Under Minnesota law, what obligation does Exit Subfranchisor have regarding the Proprietary Marks?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
- (E) MINNESOTA.
If this Agreement is governed by the laws of the State of Minnesota, then: (1) Section 16 will be amended to require that in the event Subfranchisor provides the Franchisee with written notice that Franchisee has breached this Agreement, such written notice will be provided to Franchisee at least ninety (90) days prior to the date this Agreement is terminated by the Subfranchisor, and Franchisee will have sixty (60) days after receipt of such written notice within which to correct the breach specified in the written notice; (2) notwithstanding any provision of this Agreement to the contrary, a court of competent jurisdiction will determine whether Subfranchisor will be required to post a bond or other security, and the amount of such bond or other security, in any injunctive proceeding commenced by Subfranchisor against Franchisee, Franchisee's shareholders or the partners or members, as the case may be; and (3) Subfranchisor will protect 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.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, if the franchise agreement is governed by Minnesota law, the Exit Subfranchisor has a specific obligation regarding the Proprietary Marks. The Subfranchisor must protect the franchisee's right to use the Proprietary Marks. Additionally, the Subfranchisor is obligated to indemnify the franchisee. This means the Subfranchisor will cover any losses, costs, or expenses the franchisee incurs if a claim, lawsuit, or demand arises related to the franchisee's use of the Proprietary Marks.
This provision offers a significant benefit to Exit franchisees in Minnesota. It ensures that if any legal issues arise from using Exit's trademarks or service marks, the subfranchisor will bear the financial responsibility. This protection can be particularly valuable, as trademark disputes can be costly and time-consuming.
For a prospective Exit franchisee in Minnesota, this clause provides added security and reduces potential financial risks associated with trademark usage. It is important for franchisees to understand the scope of this indemnification and what specific costs are covered. Franchisees should also confirm that the subfranchisor has the financial capacity to meet these indemnification obligations should a claim arise.