What is the Bombs Away franchisee's obligation if an Indemnitee delays notifying them of an Action?

According to Bombs Away's 2024 Franchise Disclosure Document, a franchisee's obligation to indemnify an Indemnitee is not relieved by a delay or failure to notify them of an Action. However, this is conditional. The franchisee is relieved of their indemnity obligation only to the extent that the delay or failure to notify them materially prejudices the franchisee. This means that if the delay in notification significantly harms the franchisee's ability to defend themselves, their obligation to indemnify may be reduced.

This clause protects Bombs Away and related parties from losses related to the franchisee's business operations, but it also acknowledges the franchisee's right to a fair defense. The franchisee is not allowed to settle any Action without the Indemnitee's consent, which gives the Indemnitee control over the legal strategy and potential financial impact of any settlement. This indemnity agreement remains in effect even after the franchise agreement ends, meaning that the franchisee's responsibility for past actions continues even after the business relationship with Bombs Away has terminated.

In practical terms, a Bombs Away franchisee should promptly address any notification of an Action and document any potential prejudice caused by delays in notification. This may involve consulting with legal counsel to assess the impact of the delay on their ability to mount a defense. Franchisees should also be aware that they cannot independently settle any claims without the Indemnitee's approval, ensuring that Bombs Away maintains control over legal matters that could affect the brand or other franchisees.