Can a Fat Shack franchisee contest Fat Shack's ownership of the marks?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Under the Franchise Agreement, we grant you the right and license to use the Marks solely in connection with your FAT SHACK Restaurant. You may use the Marks only in the manner authorized and permitted by us and you may not directly or indirectly contest our ownership or rights in the Marks. You cannot use any of the Marks or any portions or variations of them as part of your business name. You cannot use the Marks as part of an electronic address, domain name or on any websites on the Internet, or with modifying words, designs or symbols, except as we may license to you, without our prior written consent, which may be withheld for any reason. You may not use the Marks with an unauthorized product or service, or in a manner not authorized in writing by us. You must modify or discontinue your use of the Marks if we require the modification or discontinuance of them, at your expense.
To our knowledge, there are no agreements in effect that significantly limit our rights to use or license the use of the Marks in any manner. To our knowledge, there are no presently effective determinations of the United States Patent and Trademark Office, the Trademark Trial and Appeal Board, the trademark administrator of any state or any court, any pending infringement, opposition or cancellation proceedings or any pending material litigation involving any of the Marks which are relevant to their use.
You must notify us immediately if you become aware of any apparent infringement of or challenge to your use of any Mark.
The Franchise Agreement does not contain any provisions under which we are required to defend or indemnify you against any claims of infringement or unfair competition arising out of your use of the Marks. However, we may take action to protect you against claims of infringement or unfair competition involving the Marks, when you are using the Marks in compliance with your Franchise Agreement, if, in the opinion of our counsel, the circumstances justify our intervention. If we decide to protect you, we will reimburse you for your costs, including attorney's fees and court costs, associated with any litigation we commence or defend on your behalf to protect the licensed Marks and your rights to use them, from amounts we recover in the litigation (if any), which are in excess of our costs. You are obligated to fully cooperate with us in any litigation we commence or defend related to the Marks.
Source: Item 13 — Trademarks (FDD pages 39–40)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, franchisees are explicitly prohibited from contesting Fat Shack's ownership or rights to the trademarks. The franchise agreement grants franchisees the right to use Fat Shack's marks solely for their restaurant, but this usage must align with the franchisor's authorized manner. Franchisees cannot use the marks, variations, or portions thereof in their business name, electronic addresses, domain names, or on websites without prior written consent from Fat Shack. This consent can be withheld for any reason.
This restriction is a standard practice in franchising, as the franchisor needs to protect its brand identity and control its trademarks. Allowing franchisees to contest the trademarks would undermine the entire franchise system. Franchisees must also modify or discontinue their use of the marks if Fat Shack requires it, and this will be at the franchisee's expense.
Furthermore, franchisees are required to notify Fat Shack immediately if they become aware of any infringement or challenges to the use of any mark. While Fat Shack is not obligated to defend or indemnify franchisees against claims of infringement, they may take action to protect franchisees if they are using the marks in compliance with the franchise agreement and if their counsel believes intervention is justified. If Fat Shack decides to protect a franchisee, they will reimburse the franchisee's costs from any recovered amounts exceeding their own costs. Franchisees are obligated to cooperate fully in any litigation related to the marks. If Fat Shack chooses not to protect a franchisee, the franchisee can take steps to protect themselves at their own expense, but Fat Shack will control all proceedings and litigation involving the marks.