If a Ledgers franchisee is involved in a judicial proceeding involving a trademark, is Ledgers required to participate in their defense?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
If you learn of any claim against you for alleged infringement, unfair competition, or similar claims about the Marks, you must promptly notify us. We are not required to take affirmative action when notified of these uses or claims.
We have the sole right to control any administrative proceedings or litigation involving a trademark licensed by us to you. The Franchise Agreement does not require us to participate in your defense or indemnify you for expenses or damages if you are a party to an administrative or judicial proceeding involving a trademark licensed by us to you or if the proceeding is resolved unfavorably to you.
If we discontinue or modify our Marks, you must adopt and use any new Marks as required by us. Any expenses you incur because of adopting and using these Marks are your responsibility.
Source: Item 13 — TRADEMARKS (FDD pages 34–36)
What This Means (2025 FDD)
According to Ledgers's 2025 Franchise Disclosure Document, Ledgers is not required to participate in a franchisee's defense if the franchisee is involved in an administrative or judicial proceeding regarding a licensed trademark. Furthermore, Ledgers is not obligated to cover a franchisee's expenses or damages if the proceeding is not resolved favorably for the franchisee. However, if a franchisee becomes aware of any claims against them related to alleged infringement, unfair competition, or similar issues concerning the trademarks, they must promptly inform Ledgers.
This means that if a Ledgers franchisee faces a lawsuit over trademark usage, Ledgers has no legal obligation to provide assistance with the franchisee's defense or cover any resulting costs. This is a significant risk for franchisees, as trademark litigation can be expensive and time-consuming. While franchisees are required to notify Ledgers of any such claims, Ledgers is not required to take any action.
This type of arrangement is not uncommon in franchising, as franchisors often want to maintain control over their trademarks but may not want to assume the financial burden of defending individual franchisees in trademark disputes. It is important for prospective Ledgers franchisees to understand this provision and consider purchasing their own insurance to cover potential trademark litigation costs. Franchisees should also conduct thorough due diligence to ensure they are not infringing on any existing trademarks before beginning operations.
Ledgers retains the sole right to manage any administrative or legal actions concerning a trademark that it licenses to its franchisees. Additionally, Ledgers reserves the right to change the trademarks that franchisees are permitted to use in connection with their franchised businesses. Franchisees are responsible for any expenses incurred as a result of adopting and using these updated marks.