What constitutes a 'Claim' under the Bevaris Alliance indemnity clause?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
21.4 Liability under this indemnity is conditional on Franchisor discharging the following obligations. If any third party makes a claim, or notifies an intention to make a claim, against Franchisor which may reasonably be considered likely to give rise to a liability under this indemnity (Claim), Franchisor shall:
- (a) as soon as reasonably practicable, give written notice of the Claim to Franchisee, specifying the nature of the Claim in reasonable detail;
- (b) not make any admission of liability, agreement or compromise in relation to the Claim without the prior written consent of Franchisee (such consent not to be unreasonably conditioned, withheld or delayed), provided that Franchisor may settle the Claim (after giving prior written notice of the terms of settlement (to the extent legally possible) to Franchisee, but without obtaining Franchisee's consent) if Franchisor reasonably believes that failure to settle the Claim would be prejudicial to it in any material respect;
- (c) give Franchisee and its professional advisers access at reasonable times (on reasonable prior notice) to its premises and its officers, directors, employees, agents, representatives or advisers, and to any relevant assets, accounts, documents and records within the power or control of Franchisor, so as to enable Franchisee and its professional advisers to examine them and to take copies (at Franchisee's expense) for the purpose of assessing the Claim; and
- (d) subject to Franchisee providing security to Franchisor to Franchisor's reasonable satisfaction against any claim, liability, costs, expenses, damages or losses which may be incurred, take such action as Franchisee may reasonably request to avoid, dispute, compromise or defend the Claim.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 Bevaris Alliance Franchise Disclosure Document, a 'Claim' is defined within the context of the indemnity clause. Specifically, it refers to any situation where a third party makes a claim, or notifies an intention to make a claim, against Bevaris Alliance that could reasonably lead to liability under the indemnity agreement. This definition sets the stage for the franchisor's obligations and the franchisee's potential responsibilities regarding such claims.
In practical terms, this means that if someone outside the Bevaris Alliance franchise network (a customer, supplier, or other entity) asserts a right or demand against Bevaris Alliance, and this assertion could result in financial or legal repercussions for Bevaris Alliance, it is considered a 'Claim'. The franchisor is then obligated to notify the franchisee in writing about the claim, providing reasonable detail about its nature. This notification triggers a series of actions and considerations outlined in the indemnity clause, designed to protect both the franchisor and franchisee.
The indemnity clause includes several conditions that Bevaris Alliance must meet to ensure the franchisee's liability under the indemnity. These conditions include providing timely written notice of the claim, avoiding admissions of liability without the franchisee's consent, granting access to relevant information for assessing the claim, and taking action to address the claim as reasonably requested by the franchisee, provided the franchisee offers security against potential losses. Understanding this definition and the associated obligations is crucial for prospective franchisees, as it clarifies the circumstances under which they may be required to indemnify Bevaris Alliance against third-party claims.