What is the franchisee's obligation regarding cooperation in defending or settling litigation related to Fly Fitness trademarks?

According to Fly Fitness's 2024 Franchise Disclosure Document, franchisees have a clear obligation to cooperate fully with both the licensor and Fly Fitness in the event of litigation concerning the trademarks. This cooperation extends to both defending against claims and settling any related lawsuits. This requirement is in place to ensure a unified and coordinated legal strategy, protecting the brand's trademarks and reputation. The licensor, Fly | A Fitness Revolution, LLC, owns the marks and grants Fly Fitness the exclusive right to use and license them. Fly Fitness, in turn, licenses these trademarks to franchisees. The Franchise Agreement outlines the franchisee's right to operate under the Fly Fitness trademarks. These trademarks include those for which the licensor has filed for registration with the United States Patent and Trademark Office.

This obligation to cooperate is tied to the franchisee's right to indemnification. If a franchisee provides timely notice of any infringement or challenge to the trademarks and is in full compliance with the Franchise Agreement, Fly Fitness will indemnify them for all expenses and damages arising from claims challenging their authorized use of the trademarks. However, this protection is contingent on the franchisee's full cooperation in any legal proceedings.

Fly Fitness and the licensor retain the right to control any administrative proceedings or litigation related to the trademarks. This control, combined with the franchisee's duty to cooperate, ensures that Fly Fitness can manage legal risks effectively and protect its brand. Failure to cooperate could jeopardize the franchisee's indemnification and potentially expose them to legal liabilities.

Prospective franchisees should understand that while Fly Fitness will provide support and potential indemnification, they must actively participate in any legal defense or settlement negotiations. This may involve providing documentation, testimony, or other forms of assistance as required by Fly Fitness and its legal team. Franchisees should also be aware that Fly Fitness reserves the right to substitute different marks if the current ones can no longer be used or if a substitution is deemed beneficial to the system, potentially requiring franchisees to modify or stop using existing marks at their own expense.