Under what conditions will Anago indemnify a subfranchisee against damages related to the use of Proprietary Property?

According to Anago's 2025 Franchise Disclosure Document, Anago will indemnify a subfranchisee against damages they are held liable for in any proceeding involving the use of Proprietary Property, provided the subfranchisee meets certain conditions. These conditions are designed to ensure Anago maintains control over the defense and settlement of any claims related to the use of its trademarks and other proprietary assets.

Specifically, the subfranchisee must (a) provide timely notification to Anago of any claim, (b) comply with the Subfranchise Rights Agreement, and (c) allow Anago sole control of the defense and settlement of any claim. These stipulations are fairly standard in franchising, as franchisors typically want to manage legal challenges to protect their brand and system-wide reputation.

By requiring timely notification, Anago ensures it is informed of potential issues promptly, allowing for a quicker and potentially more effective response. Compliance with the Subfranchise Rights Agreement is a general requirement that the subfranchisee must be in good standing with all their obligations under the agreement. Granting Anago sole control over the defense and settlement is critical, as it prevents the subfranchisee from taking actions that could negatively impact the broader franchise system or create legal precedents that are unfavorable to Anago. If these conditions are met, Anago will cover the damages the subfranchisee is liable for.