What is a Red Wagon Club franchisee's obligation to receive indemnification for trademark infringement?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
Under the Franchise Agreement, we must indemnify you against, and reimburse you for, all damages for which you are held liable in any proceeding in which your use of any Mark in compliance with the Franchise Agreement is held to constitute trademark infringement, and for all reasonable costs you incur in the defense of any claim brought against you or in any proceeding in which you are named as a party, only if you have timely notified us of the claim or proceeding and comply with our directions in responding to the proceeding. At our option, we and/or RWC IP may defend and control the defense of any proceeding from your use of any Mark under the Franchise Agreement.
Source: Item 13 — TRADEMARKS (FDD pages 34–35)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, Red Wagon Club must indemnify franchisees against damages for which they are held liable in a proceeding where their use of any mark, in compliance with the Franchise Agreement, is held to constitute trademark infringement. Red Wagon Club will also reimburse franchisees for all reasonable costs incurred in defending against such claims or proceedings in which they are named as a party.
However, this indemnification is conditional. To be eligible, franchisees must promptly notify Red Wagon Club of any claim or proceeding and comply with Red Wagon Club's directions in responding to it. Red Wagon Club and/or RWC IP have the option to defend and control the defense of any proceeding arising from the franchisee's use of any mark under the Franchise Agreement.
This means that a Red Wagon Club franchisee's ability to receive indemnification for trademark infringement hinges on their adherence to the notification and compliance requirements outlined in the Franchise Agreement. Failure to promptly notify Red Wagon Club or to follow their directions could jeopardize the franchisee's right to indemnification and reimbursement for legal costs. This is a fairly standard clause in franchise agreements, as franchisors typically want to control the defense of their trademarks.