Does the Indemnifying Party have control over the Proceeding, including the right to settle, related to a Bhc franchise?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
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, the Indemnifying Party does have control over legal proceedings. Specifically, if a franchisee (or master franchisee) is indemnified by Bhc or vice versa, the party providing the indemnification (the Indemnifying Party) assumes the defense of the legal proceeding. This includes the right to choose legal counsel, provided that counsel is reasonably acceptable to the party being indemnified (the Indemnified Party).
This control extends to the right to settle the proceeding. However, there are limitations to this control. The Indemnifying Party cannot enter into any settlement or judgment without the written consent of the Indemnified Party if it involves: an admission of liability on the part of the Indemnified Party, any relief other than monetary damages for which the Indemnifying Party is solely liable, any adverse effects on the rights of the Indemnified Party under the franchise agreement, or a failure to release the Indemnified Party from all proceedings and losses related to the matter.
This section of the FDD outlines the conditions under which one party will protect and defend the other in the event of a third-party claim or legal proceeding. It is designed to allocate responsibility and control over the handling of such matters, while also protecting the interests of the party being indemnified. A prospective Bhc franchisee should carefully consider these provisions and understand their rights and obligations in the event of a legal claim.