What is Stretch Zone's obligation regarding control of litigation arising from infringement of its intellectual property?
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 has the sole right to control any litigation or other proceeding arising out of any infringement of, challenge to, or claim to any Intellectual Property. If a franchisee becomes aware of any potential infringement, they must notify Stretch Zone promptly (within 7 days) in writing and communicate only with Stretch Zone's counsel and Stretch Zone itself, except under judicial process.
Stretch Zone also requires the franchisee to sign all documents, provide assistance, and perform all acts that Stretch Zone's attorneys deem necessary to protect Stretch Zone's interests in any litigation or proceeding involving the Intellectual Property. In return, Stretch Zone will indemnify the franchisee against and reimburse them for all damages and costs, including reasonable attorneys' fees and costs, for which the franchisee is held liable in any proceeding based on their use of any of the Intellectual Property, provided the franchisee meets certain conditions.
The conditions for indemnification include: timely notification of the claim or proceeding, compliance with the Franchise Agreement, allowing Stretch Zone sole control of the defense and settlement of the action, and full cooperation with Stretch Zone's counsel in the defense of the action. This arrangement is typical in franchising, as franchisors need to protect their brand's intellectual property, but it also places specific obligations on the franchisee to cooperate fully with Stretch Zone in any legal matters.
This means that while Stretch Zone takes the lead in legal defense, the franchisee must actively participate and adhere to Stretch Zone's directives to receive protection against potential liabilities. Franchisees should be aware of these obligations and ensure they understand the importance of promptly reporting any potential infringement issues to Stretch Zone.