Who controls the Proceeding, including the right to settle, when the Indemnifying Party assumes the defense of such Proceeding for Bhc?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
The Indemnifying Party will assume, at its sole cost and expense, the defense of such Proceeding through legal counsel reasonably acceptable to the Indemnified Party, except that the Indemnified Party may at its option and expense select and be represented by separate counsel.
The Indemnifying Party will have control over the Proceeding, including the right to settle; provided, however, the Indemnifying Party will not, absent the written consent of the Indemnified Party, consent to the entry of any judgment or enter into any settlement that: (i) provides for any admission of liability on the part of the Indemnified Party or relief other than the payment of monetary damages for which the Indemnifying Party will be solely liable; or (ii) adversely affects the rights of the Indemnified Party under this Agreement, or (iii) does not release the Indemnified Party from all Proceedings and "Losses" (as defined in section 16.2(d) below) in respect thereof.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, when the Indemnifying Party assumes the defense of a Proceeding, they have control over the Proceeding, including the right to settle. However, this control is not absolute.
The Indemnifying Party cannot consent to any judgment or settlement that involves specific conditions without the written consent of the Indemnified Party. These conditions include: any admission of liability on the part of the Indemnified Party, any relief other than the payment of monetary damages for which the Indemnifying Party will be solely liable, any adverse effects on the rights of the Indemnified Party under the Franchise Agreement, or any failure to release the Indemnified Party from all Proceedings and "Losses."
This means that while the Indemnifying Party manages the legal defense and settlement negotiations, the Indemnified Party retains the right to protect their interests and reputation. Bhc franchisees should understand these conditions to ensure their rights are protected in case of any legal proceedings where indemnification applies.