What are the conditions that a Stretch Zone franchisee must meet to be indemnified against damages and costs related to intellectual property use?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
If there is any claim of infringement, unfair competition or other challenge to your right to use the Principal Trademark or any of the other marks and Intellectual Property, or if you become aware of any use of, or claims to, any of the Intellectual Property by persons other than us or our Franchisees, you will promptly (within 7 days) notify us in writing. You will not communicate with anyone except our counsel and us on any infringement, challenge or claim except under judicial process. We have sole discretion as to whether we take any action on any infringement, challenge or claim. We have the sole right to control any litigation or other proceeding arising out of any infringement of, challenge to, or claim to any Intellectual Property. You must sign all documents, render all assistance, and do all acts that our attorneys consider necessary or advisable in order to protect and maintain our interest in any litigation or proceeding involving the Intellectual Property or otherwise to protect and maintain our interests in the Intellectual Property. We indemnify you against and will reimburse you for all damages and costs (including reasonable attorneys' fees and costs) for which you are held liable in any proceeding based on your use of any of the Intellectual Property in accordance with the Franchise Agreement, provided you: (a) have timely notified us of the claim or proceeding; (b) have otherwise complied with the Franchise Agreement; (c) allow us sole control of the defense and settlement of the action; and (d) cooperate fully with our counsel in the defense of the action.
Source: Item 13 — ITEM -13 TRADEMARKS (FDD pages 58–60)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, Stretch Zone will indemnify its franchisees against damages and costs related to claims of intellectual property infringement if the franchisee meets certain conditions. Specifically, Stretch Zone will cover damages and costs, including reasonable attorney's fees, for which a franchisee is held liable in a proceeding based on their use of Stretch Zone's intellectual property, as long as that use is in accordance with the Franchise Agreement.
To be eligible for indemnification, a Stretch Zone franchisee must notify Stretch Zone of any claim or proceeding in a timely manner. The FDD specifies that franchisees must notify Stretch Zone within 7 days of any claim of infringement, unfair competition, or other challenge to the right to use Stretch Zone's trademarks or intellectual property. The franchisee must also comply with all other terms of the Franchise Agreement.
Furthermore, the franchisee must allow Stretch Zone sole control over the defense and settlement of any action related to the intellectual property claim. This means the franchisee cannot independently make decisions about the legal strategy or settlement terms. Finally, the franchisee must fully cooperate with Stretch Zone's counsel in the defense of the action, including signing documents and providing assistance as needed. Failing to meet any of these conditions could void Stretch Zone's obligation to indemnify the franchisee.