Under what circumstances will Atwell Suites indemnify a franchisee against third-party claims?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
The Minnesota Department of Commerce requires that IHG indemnify Minnesota licensees against liability to third parties resulting from claims by third parties that the Licensee's use of IHG's trademark infringes trademark rights of the third party. IHG does not indemnify against the consequences of Licensee's use of IHG's trademark except in accordance with the requirements of the License, and, as a condition to indemnification, Licensee must provide notice to IHG of any such claim within ten (10) days and tender the defense of the claim to IHG. If IHG accepts the tender of defense, IHG has the right to manage the defense of the claim including the right to compromise, settle or otherwise resolve the claim, and to determine whether to appeal a final determination of the claim.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to the 2025 Atwell Suites Franchise Disclosure Document, the franchisor, IHG, provides indemnification to Minnesota franchisees against liability to third parties under specific conditions. This indemnification applies when a third party claims that the franchisee's use of IHG's trademark infringes upon the trademark rights of that third party. However, Atwell Suites only provides this indemnification in accordance with the requirements of the License Agreement.
To be eligible for indemnification, the franchisee must notify IHG of any such claim within ten days and formally offer the defense of the claim to IHG. If IHG accepts this defense, it has the right to manage the claim's defense, including the ability to compromise, settle, resolve the claim, or decide whether to appeal any final determination. This process ensures IHG maintains control over legal proceedings that could affect its trademarks and brand reputation.
This clause is particularly important for prospective franchisees in Minnesota as it provides a degree of protection against trademark infringement claims, which can be costly and time-consuming to defend. However, franchisees must adhere strictly to the notification and defense tender requirements to ensure they can benefit from this indemnification. Outside of Minnesota, the FDD excerpts do not specify under which conditions Atwell Suites will indemnify a franchisee.