Under what condition is the Bevaris Alliance Franchisor's liability under the indemnity conditional?
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, the franchisor's liability under the indemnity is conditional upon the franchisor fulfilling specific obligations when a third party makes a claim. If a third party makes a claim, or intends to make a claim, that could lead to liability under the indemnity, the franchisor must take certain actions to maintain the franchisee's indemnity obligations.
First, Bevaris Alliance must promptly provide written notice of the claim to the franchisee, detailing the nature of the claim. Second, the franchisor cannot admit liability, make agreements, or compromise the claim without the franchisee's prior written consent. However, Bevaris Alliance can settle the claim without the franchisee's consent if it reasonably believes that not settling would be significantly detrimental, after notifying the franchisee of the settlement terms when legally possible.
Additionally, Bevaris Alliance must allow the franchisee and its advisors access to its premises, officers, documents, and records for assessing the claim, with reasonable notice and at reasonable times. Finally, Bevaris Alliance must take actions reasonably requested by the franchisee to dispute or defend the claim, provided the franchisee offers security to cover potential liabilities, costs, expenses, damages, or losses to the franchisor's satisfaction. These conditions ensure the franchisee is informed and involved in the claim process, and that their interests are considered in handling the claim.