Can the Indemnified Party select separate legal counsel 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, if a franchisee or master franchisee is an indemnified party in a legal proceeding, they have the option to select their own legal counsel. However, this is at their own expense. Bhc, as the indemnifying party, will initially assume the defense of the proceeding through legal counsel reasonably acceptable to the indemnified party.
Bhc retains control over the legal proceeding, including the right to settle. However, Bhc cannot enter into any settlement that involves an admission of liability by the indemnified party, adversely affects the indemnified party's rights under the Franchise Agreement, or fails to release the indemnified party from all proceedings and losses without the indemnified party's written consent.
This arrangement provides the franchisee some control over their legal representation in the event of a claim while also giving Bhc the ability to manage the overall legal strategy and potential settlement. The franchisee bears the cost of their separate counsel, which is a deviation from the typical arrangement where the franchisor covers legal costs when they indemnify the franchisee.