What is an Aplus franchisee required to do if they are aware of any event for which indemnification is required?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
You shall give Franchisor prompt notice of any event of which you are aware, for which indemnification is required, and, at your expense and risk, Franchisor may elect to assume (but under no circumstance is obligated to undertake) the defense and/or settlement thereof, provided that Franchisor will seek your advice and counsel. Any assumption by Franchisor shall not modify your indemnification obligation. Franchisor may, in its sole and absolute discretion, take such actions as it seems necessary and appropriate to investigate, defend, or settle any event or take other remedial or corrective actions with respect thereof as may be, in Franchisor's sole and absolute discretion, necessary for the protection of the indemnities or the System.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, a franchisee must promptly notify Aplus of any event they are aware of that may require indemnification. Indemnification refers to the franchisee's obligation to protect Aplus from losses and expenses related to the business.
This notification requirement is crucial because it allows Aplus to take timely action to investigate, defend, or settle the matter. While Aplus has the option to assume the defense and/or settlement of the event, they are not obligated to do so. If Aplus chooses to assume the defense, they will seek the franchisee's advice and counsel, but the franchisee's indemnification obligation remains unchanged.
The term "losses and expenses" is broadly defined and includes damages, fines, attorney's fees, and costs associated with investigations, settlements, and judgments, as well as compensation for damage to Aplus's reputation and goodwill. This means that the franchisee could be responsible for a wide range of costs if an event occurs that triggers the indemnification clause. Franchisees should understand the scope of this obligation and the importance of promptly reporting any potential indemnification events to Aplus.