What must the Bevaris Alliance Franchisor do before settling a Claim without the Franchisee's consent?
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, if a third party makes a claim against Bevaris Alliance that could lead to liability under the indemnity, Bevaris Alliance must fulfill certain obligations. Specifically, before settling a claim without the franchisee's prior written consent, Bevaris Alliance must provide prior written notice of the terms of the settlement to the franchisee, to the extent legally possible.
However, Bevaris Alliance is not required to obtain the franchisee's consent if it reasonably believes that failing to settle the claim would be materially prejudicial to its interests. This means that Bevaris Alliance retains the right to make settlement decisions it deems necessary to protect its own interests, even if the franchisee does not agree, provided that they inform the franchisee of the settlement terms beforehand when legally permissible.
Additionally, Bevaris Alliance must provide the franchisee and their advisors access to relevant premises, officers, documents, and records for assessing the claim. The franchisee can also request Bevaris Alliance to take specific actions to avoid, dispute, compromise, or defend the claim, provided the franchisee offers security to Bevaris Alliance against potential liabilities, costs, expenses, damages, or losses. This ensures the franchisee has some level of input and access to information regarding the claim, even if they do not have final say on the settlement.
This clause outlines the conditions under which Bevaris Alliance can settle claims without the franchisee's consent, balancing the franchisor's need to protect its interests with the franchisee's right to be informed and involved in the process. It is important for prospective franchisees to understand these conditions, as they define the scope of their influence over claim settlements and their potential liability under the indemnity.