Is Extreme Art Studio required to reimburse a franchisee's costs for promoting a modified trademark?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
If it becomes advisable at any time for us and/or you to modify or discontinue using any Mark and/or use one or more additional or substitute trade or service marks, you must comply with our directions within a reasonable time after receiving notice. We do not have to reimburse you for your costs, loss of revenue, or other expenses of promoting a modified and/or substitute trademark or service mark.
You must not contest, or assist any other person in contesting, the validity of our and LSO's ownership of the Mark. Your use of the Mark and any goodwill established by that use are exclusively for our and LSO's benefit.
Under the Franchise Agreement, we will indemnify you against, and reimburse you for, all damages for which you are held liable in any proceeding in which your use of any Mark in compliance with the Franchise Agreement is held to constitute trademark infringement, and for all reasonable costs you incur in the defense of any claim brought against you or in any proceeding in which you are named as a party, only if you have timely notified us of the claim or proceeding and comply with our directions in responding to the proceeding. At our option, we and/or LSO may defend and control the defense of any proceeding arising from your use of any Mark under the Franchise Agreement.
Source: Item 13 — TRADEMARKS (FDD pages 39–40)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, Extreme Art Studio is not required to reimburse franchisees for the costs associated with promoting a modified trademark. The FDD states that if Extreme Art Studio finds it necessary to modify or discontinue the use of any trademark, franchisees must comply with their directions. However, Extreme Art Studio does not have to cover any costs, loss of revenue, or other expenses that the franchisee incurs while promoting the modified trademark.
This policy places the financial burden of adapting to a trademark change on the franchisee. Trademark modifications can occur for various reasons, such as legal challenges or rebranding efforts by Extreme Art Studio. Franchisees need to be aware that they will be responsible for expenses related to updating signage, marketing materials, and other promotional items to reflect the new trademark.
While Extreme Art Studio does not reimburse for promoting modified trademarks, they will reimburse a franchisee's reasonable costs for taking action that Extreme Art Studio has asked them to take. Additionally, Extreme Art Studio will indemnify franchisees against damages for which they are held liable in a proceeding where the franchisee's use of any mark in compliance with the Franchise Agreement constitutes trademark infringement. This protection is contingent upon the franchisee notifying Extreme Art Studio of the claim or proceeding and complying with their directions in responding to it.