Under what circumstances related to a settlement of a Third-Party Claim against Camp Margaritaville does the Indemnified Party NOT have the right to approve the proposed settlement?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
With respect to infringement claims by third parties against Licensee asserting that the License or Sublicense of the Margaritaville Intellectual Property infringes their rights, Licensee shall give prompt notice thereof to Licensor and Licensor shall have the sole right to direct and control the defense and settlement of such claims at Licensor's sole expense, unless such claims are based on the breach of this Agreement
by Licensee, in which case such costs shall be borne exclusively by Licensee. Such rights shall not be exercised in an arbitrary or capricious manner.
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, if a third party brings an infringement claim against the franchisee (Licensee) asserting that the License or Sublicense of the Margaritaville Intellectual Property infringes their rights, Camp Margaritaville (Licensor) has the sole right to direct and control the defense and settlement of such claims at its own expense.
However, this right is not absolute. If the infringement claim is based on the franchisee's breach of the franchise agreement, the franchisee will bear the costs of the defense and settlement.
Camp Margaritaville's control over the defense and settlement of infringement claims must be exercised reasonably, as these rights cannot be exercised in an arbitrary or capricious manner. This ensures that Camp Margaritaville acts in good faith and considers the franchisee's interests when handling such claims.