When does the C3 Wellness Spa Indemnitee have the right to control the defense of a claim against it?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
- 7.04. Right to Control Defense. If the Indemnitee gives notice to the Indemnitor that, in its good faith judgment, Claim(s) made against it could have a non-monetary material adverse effect on the Indemnitee, the Indemnitee will have the right to control (at the Indemnitor's expense and with counsel reasonably satisfactory to the Indemnitor) the defense (but not with respect to the Indemnitor).
If an Indemnitee elects to control the defense under this section, the Indemnitee will not consent to the entry of a judgment or enter into a settlement that would require the Indemnitor to pay any amounts under this Section 7.04 without the prior written consent of the Indemnitor, which will not to be unreasonably withheld, conditioned, or delayed.
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
According to C3 Wellness Spa's 2024 Franchise Disclosure Document, an Indemnitee has the right to control the defense of a claim under specific circumstances. If the Indemnitee believes, in good faith, that a claim made against it could have a non-monetary material adverse effect on the Indemnitee, it can take control of the defense.
This control comes at the Indemnitor's expense, and the counsel chosen must be reasonably satisfactory to the Indemnitor. However, this control does not extend to matters concerning the Indemnitor itself. If the Indemnitee chooses to control the defense, it cannot consent to a judgment or settlement that would require the Indemnitor to pay any amounts without the Indemnitor's prior written consent, which cannot be unreasonably withheld, conditioned, or delayed.
This provision ensures that C3 Wellness Spa has the ability to protect its interests when a claim could significantly impact its operations or reputation, while also providing some safeguards for the Indemnitor regarding financial responsibility and legal representation.