Is an Extreme Art Studio franchisee allowed to sublicense their right to use the Marks?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
5. MARKS.
5.1 OWNERSHIP AND GOODWILL OF MARKS. Our affiliate ("Trademark Owner") has licensed the Marks to us to use in connection with the franchising of Extreme Art Studio Businesses. Your non-exclusive right to use the Marks is derived only from this Franchise Agreement and limited to your operating the Franchised Business according to this Franchise Agreement and all System Standards we prescribe during its term. Your unauthorized use of the Marks is a breach of this Franchise Agreement and infringes the Trademark Owner's and our rights in the Marks. You acknowledge and agree that any unauthorized use of the Marks will cause us and the Trademark Owner irreparable harm for which there is no adequate remedy at law and will entitle us and the Trademark Owner to injunctive relief. You acknowledge and agree that your use of the Marks and any goodwill established by that use are exclusively for our and the Trademark Owner's benefit, and that this Franchise Agreement does not confer any goodwill or other interests in the Marks upon you (other than the right to operate the Franchised Business under this Franchise Agreement). All provisions of this Franchise Agreement relating to the Marks apply to any additional propriet
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, the Extreme Art Studio franchise agreement does not explicitly grant franchisees the right to sublicense their use of the Marks. Instead, the agreement emphasizes that the franchisee's right to use the Marks is non-exclusive and derived solely from the franchise agreement itself. This right is specifically limited to operating the franchised business according to the agreement and the System Standards set by Extreme Art Studio. Unauthorized use of the Marks constitutes a breach of the agreement and infringes upon the rights of both Extreme Art Studio and the Trademark Owner.
Extreme Art Studio retains specific rights regarding the Marks and the operation of businesses using them. These rights include the ability to establish and operate other Extreme Art Studio businesses or businesses offering similar services, even within the territory of an existing franchisee. They also retain the right to use the Marks to sell products or services through alternative channels of distribution, such as online sales or wholesale, both within and outside the franchisee's territory. Furthermore, Extreme Art Studio has the right to offer, franchise, and license the right to offer each of the modules described in Section 3.7 of the Franchise Agreement.
The agreement also makes it clear that all goodwill associated with the use of the Marks accrues exclusively to the benefit of Extreme Art Studio and the Trademark Owner. Franchisees do not acquire any independent goodwill or other interests in the Marks beyond the right to operate their franchised business under the terms of the agreement. This is a common arrangement in franchising, designed to protect the brand's integrity and value.
Upon termination or expiration of the franchise agreement, the franchisee must cease all use of the Marks and take necessary actions to de-identify their business as a former Extreme Art Studio location. This includes canceling or assigning all related registrations and transferring control of identifiers like telephone numbers and social media accounts to Extreme Art Studio. These provisions underscore the franchisor's control over the Marks and the franchisee's limited, non-transferable right to use them during the term of the agreement.