Does All States M.E.D. have the right to take action to protect its reputation?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
iliate); (d) defamation of Franchisor or the System; (e) acts, errors or omissions committed or incurred in connection with the Franchised Business; or (f) infringement, violation or alleged infringement or violation of any Mark, patent or copyright or any misuse of the Trade Secrets or other Confidential Information. The obligations of this Section 21.3 shall expressly survive the termination of this Agreement.
21.4 Right to Retain Counsel
Franchisee shall give Franchisor immediate notice of any such action, suit, demand, claim, investigation, or proceeding that may give rise to a claim for indemnification by a Franchisor Indemnity. Franchisor has the right to retain counsel of its own choosing in connection with any such action, suit, demand, claim, investigation or proceeding. In order to protect persons, property, Franchisor's reputation or the goodwill of others, Franchisor has the right to, at any time without notice, take such remedial or corrective actions as it deems expedient with respect to any action, suit, demand, claim, investigation or proceeding if, in Franchisor's sole judgment, there are grounds to believe any of the acts or circumstances listed above have occurred. If Franchisor's exercise of its rights under this Section causes any of Franchisee's insurers to refuse to pay a third-party claim, all cause of action and legal remedies Franchisee
might have against such insurer shall automatically be assigned to Franchisor without the need for any further action on either party's part.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to the 2024 All States M.E.D. Franchise Disclosure Document, All States M.E.D. has the right to take action to protect its reputation. Specifically, All States M.E.D. can take remedial or corrective actions at any time without notice if it believes certain acts or circumstances have occurred that could impact its reputation or goodwill.
This means that All States M.E.D. franchisees must be aware that the franchisor can intervene in their business operations if All States M.E.D. believes there is a risk to its reputation. This could include actions related to lawsuits, claims, or investigations. The franchisee is required to notify All States M.E.D. of any such issues immediately.
Furthermore, if All States M.E.D. takes action to protect its reputation and this causes the franchisee's insurance to deny a claim, the franchisee's rights against the insurer are automatically assigned to All States M.E.D.. This indicates that All States M.E.D. prioritizes protecting its brand and is willing to take legal recourse if necessary, even if it impacts the franchisee's insurance coverage.
All States M.E.D. is not obligated to seek coverage from third parties or mitigate losses to maintain a claim against the franchisee. The franchisee also agrees not to participate in class action lawsuits against All States M.E.D. or its affiliates. This highlights the importance of franchisees adhering to the standards and procedures set by All States M.E.D. to avoid actions that could harm the brand's reputation.