Under what circumstance will the Fat Shack franchisee control their defense in litigation involving copyrighted materials?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
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 our copyrighted materials. However, we may take action to protect you against claims of infringement or unfair competition involving our copyrighted materials, when you are using them in compliance with your Franchise Agreement, if, in the opinion of our counsel, the circumstances justify our intervention. You are obligated to fully cooperate with us in any litigation we commence or defend related to our copyrighted materials. We will control all proceedings and litigation involving our copyrighted materials, except that you will control your defense if we have elected not to protect you against claims of infringement or unfair competition.
Source: Item 14 — Patents, Copyrights, and Proprietary Information (FDD pages 40–41)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, Fat Shack retains control of proceedings and litigation involving their copyrighted materials. However, a Fat Shack franchisee will control their defense if Fat Shack has elected not to protect the franchisee against claims of infringement or unfair competition. In this case, the franchisee assumes responsibility for their legal defense.
This means that if a third party sues a Fat Shack franchisee for copyright infringement related to Fat Shack's materials, Fat Shack initially decides whether to step in and defend the franchisee. If Fat Shack declines to provide this protection, the franchisee is then responsible for managing and funding their own legal defense.
It is important for a prospective Fat Shack franchisee to understand the circumstances under which Fat Shack will or will not provide legal defense in copyright infringement cases. This could have significant financial implications, as legal costs can be substantial. A franchisee should discuss with Fat Shack what factors would lead them to not defend a franchisee in such a situation.