If an Indemnitee delays notifying a Better Blend franchisee of an Action, does this automatically relieve the franchisee of their indemnity obligation?

According to Better Blend's 2024 Franchise Disclosure Document, a delay or failure by an Indemnitee to notify a franchisee of an Action does not automatically relieve the franchisee of their indemnity obligation. The franchisee is only relieved of their obligation to the extent that the delay or failure materially prejudices the franchisee. This means that the franchisee must demonstrate that the delay in notification caused actual harm or disadvantage to their ability to defend against the Action.

This provision is important for prospective Better Blend franchisees because it clarifies the conditions under which they can be relieved of their indemnity obligations. Indemnification clauses can be very broad, so this offers some protection to the franchisee. However, the burden of proof is on the franchisee to demonstrate that they were materially prejudiced by the delay.

In practical terms, if a Better Blend franchisee is notified late about a claim against them, they need to assess whether the delay has negatively impacted their ability to respond effectively. For example, if critical evidence was lost or witnesses became unavailable due to the delay, this could constitute material prejudice. Franchisees should document any such instances carefully, as they may need to present this evidence to support their claim that they should be relieved of their indemnity obligation. Franchisees are also not allowed to settle an Action without the consent of the Indemnitee.