Does the Lees Famous Recipe Trademark License Agreement contain any material limitations?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
The Marks are owned by our Parent, which has granted us a license to use and license franchisees to use the marks effective June 21, 2021 (the "Trademark License Agreement"). The Trademark License Agreement is effective indefinitely unless terminated at the option of either party. Our Parent may terminate the Trademark License Agreement if our misuse of the Marks materially impairs the goodwill associated with the Marks, if we violate any of our Parent's instructions concerning the quality of the Marks, or if we fail to perform any other obligation under the Trademark License Agreement, and we fail to cure such breach within 30 days. If the Trademark License Agreement terminates, any then-existing sublicenses (franchises) will automatically be assigned to our Parent and will continue for the term of the sublicenses, provided that the franchisees comply with all other terms of their Franchise Agreements. The Trademark License Agreement contains no other material limitations.
Source: Item 13 — TRADEMARKS (FDD pages 50–52)
What This Means (2025 FDD)
According to the 2025 Lees Famous Recipe Franchise Disclosure Document, the Trademark License Agreement between Lees Famous Recipe and its parent company, which grants Lees Famous Recipe the right to use and license its trademarks to franchisees, generally contains no material limitations. However, the agreement can be terminated under specific conditions. The parent company can terminate the agreement if Lees Famous Recipe misuses the marks in a way that significantly harms the goodwill associated with them, violates the parent's instructions regarding the quality of the marks, or fails to meet other obligations outlined in the Trademark License Agreement and does not correct the breach within 30 days. If the Trademark License Agreement is terminated, the existing franchise agreements (sublicenses) will be automatically assigned to the parent company and will continue as long as the franchisees comply with the terms of their Franchise Agreements.
It is important to note that Lees Famous Recipe does not have a federal registration for one of its principal trademarks. This means the trademark may not have as many legal benefits and rights as a federally registered trademark. If the right to use the trademark is challenged, franchisees may have to change to an alternative trademark, which may increase their expenses. Lees Famous Recipe is also not obligated to protect a franchisee's right to use the Marks or to protect them against infringement or unfair competition claims arising out of their use of the Marks.
Lees Famous Recipe retains control over any administrative or legal proceedings related to the Marks, including the right to decide whether to pursue or settle such matters. The Franchise Agreement does not require Lees Famous Recipe to participate in a franchisee's defense or provide indemnity for expenses or damages if the franchisee is involved in a proceeding concerning the Marks, or if the proceeding is resolved unfavorably to the franchisee. Franchisees do not have any rights under the Franchise Agreement if Lees Famous Recipe requires them to modify or discontinue using a trademark, and Lees Famous Recipe is not obligated to reimburse franchisees for any costs associated with compliance.