What is a Fat Shack franchisee required to do if they become aware of any infringement of the marks?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
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. If we do not elect to protect you against claims of infringement or unfair competition, you may take steps to protect yourself at your own expense. We will control all proceedings and litigation involving the Marks, except that you will control your defense if we have elected not to protect you against claims of infringement or unfair competition.
Source: Item 13 — Trademarks (FDD pages 39–40)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee must immediately notify Fat Shack if they become aware of any apparent infringement of or challenge to their use of any mark. This requirement ensures that Fat Shack is promptly informed of any potential threats to its trademarks, allowing them to take appropriate action to protect their brand.
While the franchisee is obligated to report any infringement or challenges, the Franchise Agreement does not require Fat Shack to defend or indemnify the franchisee against claims of infringement or unfair competition arising from the use of the marks. However, Fat Shack may choose to take action to protect the franchisee 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 the franchisee, they will reimburse the franchisee for costs, including attorney's fees and court costs, associated with any litigation they commence or defend on the franchisee's behalf, from amounts recovered in the litigation (if any), which are in excess of Fat Shack's costs. The franchisee is obligated to fully cooperate with Fat Shack in any litigation related to the marks.
If Fat Shack does not elect to protect the franchisee against claims of infringement or unfair competition, the franchisee may take steps to protect themselves at their own expense. However, Fat Shack retains control over all proceedings and litigation involving the marks, except that the franchisee will control their defense if Fat Shack has elected not to protect them against claims of infringement or unfair competition. This means that while a franchisee can defend themselves, Fat Shack ultimately decides the legal strategy concerning their trademarks.
This arrangement highlights the importance of trademark protection in franchising. Franchisees benefit from using established brands like Fat Shack, but they also bear the responsibility of safeguarding those brands by reporting any potential infringements. The franchisor's right, but not obligation, to defend the franchisee adds a layer of complexity, making it crucial for prospective franchisees to understand their rights and responsibilities regarding trademark protection.