Does the Ledgers Franchise Agreement require Ledgers to indemnify a franchisee for expenses if they are a party to an administrative proceeding involving a trademark?

According to Ledgers's 2025 Franchise Disclosure Document, the Franchise Agreement does not require Ledgers to participate in a franchisee's defense or indemnify them for expenses or damages if the franchisee is involved in an administrative or judicial proceeding concerning a trademark licensed to them by Ledgers, or if the proceeding's outcome is unfavorable to the franchisee. This means that if a franchisee faces a legal challenge related to the use of Ledgers's trademarks, the franchisee will likely be responsible for covering their own legal costs and any resulting damages.

This lack of required indemnification places a significant financial risk on the franchisee. Trademark disputes can be costly, and without Ledgers's obligation to provide financial support, a franchisee could face substantial expenses, regardless of the dispute's outcome. This is a critical point for potential franchisees to consider, as it directly impacts their potential liabilities and financial exposure.

While Ledgers retains the sole right to control any administrative proceedings or litigation involving a trademark licensed to the franchisee, this control does not translate into a financial obligation to support the franchisee's defense. This arrangement is not uncommon in franchising, where franchisees often bear the responsibility for legal challenges related to their specific operations, even when those challenges involve the franchisor's trademarks. Prospective franchisees should carefully evaluate their risk tolerance and consider obtaining legal counsel to fully understand the implications of this provision.

It is important for prospective Ledgers franchisees to inquire about the history of trademark disputes involving the brand and to assess the potential risks associated with trademark infringement claims in their specific market. Understanding the potential costs and liabilities associated with trademark issues is a crucial part of the due diligence process before investing in a Ledgers franchise.