For Bevaris Alliance, what is the obligation of the franchisee regarding amounts recovered?
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.
- 21.5 If a payment due from Franchisee under this clause is subject to tax (whether by way of direct assessment or withholding at its source), Franchisor shall be entitled to receive from Franchisee such amounts as shall ensure that the net receipt, after tax, to Franchisor in respect of the payment is the same as it would have been were the payment not subject to tax.
- 21.6 Nothing in this clause shall restrict or limit Franchisor's general obligation at law to mitigate a loss it may suffer or incur as a result of an event that may give rise to a claim under this indemnity.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to Bevaris Alliance's 2024 Franchise Disclosure Document, the franchisee has obligations regarding amounts recovered in the context of third-party claims against the franchisor. Specifically, if a third party makes a claim against Bevaris Alliance that could lead to liability, Bevaris Alliance must promptly notify the franchisee in writing, detailing the nature of the claim.
The franchisee's consent is required before Bevaris Alliance makes any admission of liability, agreement, or compromise related to the claim. However, Bevaris Alliance can settle the claim without the franchisee's consent if it reasonably believes that not settling would be materially prejudicial, provided they give prior written notice of the settlement terms to the franchisee to the extent legally possible.
Furthermore, the franchisee must provide security to Bevaris Alliance, to Bevaris Alliance's reasonable satisfaction, against any potential claims, liabilities, costs, expenses, damages, or losses. In return, Bevaris Alliance will take actions reasonably requested by the franchisee to avoid, dispute, compromise, or defend the claim. If a payment from the franchisee is subject to tax, the franchisee must ensure that Bevaris Alliance receives the net amount it would have received if the payment were not taxed. Bevaris Alliance also has a general obligation to mitigate any loss that may occur as a result of an event that could lead to a claim under this indemnity.