What is the Camp Margaritaville Indemnifying Party's obligation regarding the costs and expenses of the Indemnified Party in defending a Third-Party Claim?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
Any Indemnified Party shall be entitled, upon written notice to the Indemnifying Party, to the timely appointment of counsel by the Indemnifying Party for the defense of any Third-Party Claim, which counsel shall be subject to the commercially reasonable approval of the Indemnified Party.
If, in the Indemnified Party's commercially reasonable judgment, a material conflict of interests exists between the Indemnified Party and the Indemnifying Party at any time during the defense of the Indemnified Party, the Indemnified Party may appoint independent counsel of its choice for the defense of the Indemnified Party as to such Third-Party Claim.
- (b) Participation in Defense.
Regardless of whether the Indemnified Party has appointed counsel or selects independent counsel:
(i) the Indemnified Party shall have the right, at its sole cost and expense (except as provided in (ii) below), to participate in the defense of any Third-Party Claim and approve, on a commercially reasonable basis, any proposed settlement of such Third-Party Claim, unless: [A] such settlement involves only the payment of money other than by the Indemnified Party; [B] the Indemnifying Party pays all amounts due in connection with or by reason of such settlement and, as part thereof; and [C] the Indemnified Party is unconditionally released from all liability in respect of such Third-Party Claim; and
(ii) except as otherwise noted, all commercially reasonable costs and expenses (including attorneys' fees and costs) of the Indemnified Party shall be paid by the Indemnifying Party, except to the extent that an insurance company or the Indemnifying Party supplies counsel, but the Indemnified Party desires to have its own counsel for review or other purposes.
(c) Reimbursement.
If the Indemnifying Party fails to timely pay such costs and expenses (including commercially reasonable attorneys' fees and costs), the Indemnified Party shall have the right, but not the obligation, and not in lieu of any other rights and remedies, to pay such amounts and be reimbursed by the Indemnifying Party for the same, together with interest thereon until paid in full.
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, the Indemnifying Party is generally responsible for covering the commercially reasonable costs and expenses, including attorney's fees, incurred by the Indemnified Party in defending against a Third-Party Claim. This obligation exists unless an insurance company or the Indemnifying Party provides counsel, but the Indemnified Party chooses to have their own counsel for review or other purposes. The Indemnified Party is entitled to the timely appointment of counsel by the Indemnifying Party for the defense of any Third-Party Claim, which counsel shall be subject to the commercially reasonable approval of the Indemnified Party.
However, the Indemnified Party has the right to participate in the defense of any Third-Party Claim at its own cost, unless the settlement involves only the payment of money by the Indemnifying Party, the Indemnifying Party pays all amounts due, and the Indemnified Party is unconditionally released from all liability. If a material conflict of interest arises between the Indemnified Party and the Indemnifying Party during the defense, the Indemnified Party can appoint independent counsel at its own discretion.
If the Indemnifying Party fails to promptly pay the costs and expenses, the Indemnified Party has the right to pay those amounts and seek reimbursement from the Indemnifying Party, along with interest until the amount is paid in full. This right does not replace any other legal remedies available to the Indemnified Party. This section outlines the financial responsibilities and rights of both parties in the event of a third-party claim, ensuring that the Indemnified Party is adequately protected while also allowing the Indemnifying Party to manage the defense efficiently.