If a franchisee is involved in an administrative or judicial proceeding involving any Copyrighted Materials, will The Standardx indemnify them for damages and expenses?

According to The Standardx's 2025 Franchise Disclosure Document, The Standardx is not required to participate in a franchisee's defense nor indemnify them for damages and expenses if the franchisee is involved in an administrative or judicial proceeding concerning Copyrighted Materials. This also applies if the proceeding's resolution is unfavorable to the franchisee. The Standardx retains the right to ask a franchisee to modify or discontinue using any of the Copyrighted Materials, or to use additional or substitute copyrighted items, at any time, and the franchisee must immediately comply with these directions.

This lack of indemnification could pose a significant financial risk to a The Standardx franchisee. If a franchisee is sued for copyright infringement related to materials they are using under the franchise agreement, they will be responsible for their own legal defense and any resulting damages. This is a departure from some franchise systems where the franchisor provides some level of indemnification for intellectual property disputes.

Prospective franchisees should carefully consider this lack of indemnification and factor in the potential costs of defending against copyright claims. It would be prudent to discuss this issue further with The Standardx to understand the scope of Copyrighted Materials, the potential risks of infringement, and whether any additional insurance coverage is available to mitigate this risk. Understanding the specific Copyrighted Materials and how The Standardx protects them is crucial for assessing the potential liability.