What is the limit of Spray Net's liability under the indemnification clause regarding the Proprietary Marks?

According to Spray Net's 2025 Franchise Disclosure Document, the franchisor's liability regarding indemnification related to the use of proprietary marks is capped. Specifically, Spray Net's financial responsibility for defending the franchisee against third-party claims arising from the use of Spray Net's proprietary marks is limited to the amount of the initial franchise fee paid by the franchisee.

This means that if a franchisee faces a lawsuit due to the authorized use of Spray Net's trademarks, and Spray Net takes control of the defense, the maximum amount Spray Net would be liable for is the initial franchise fee. This cap applies regardless of the actual costs incurred in defending the lawsuit or any damages awarded against the franchisee.

For a prospective Spray Net franchisee, this limitation is a critical factor to consider. While Spray Net agrees to indemnify and defend against claims related to the use of its marks, the financial protection is limited. Franchisees should assess whether this coverage is sufficient, considering the potential risks and costs associated with intellectual property disputes. It is advisable to discuss this limitation with legal counsel to understand the potential out-of-pocket expenses they might incur beyond the initial franchise fee in such situations.