Under what conditions can an Indemnified Party appoint independent counsel for the defense of a Third-Party Claim related to Camp Margaritaville?

According to Camp Margaritaville's 2025 Franchise Disclosure Document, an Indemnified Party can appoint independent counsel for the defense of a Third-Party Claim if a material conflict of interest exists between the Indemnified Party and the Indemnifying Party during the defense. This determination is based on the Indemnified Party's commercially reasonable judgment.

This means that if a situation arises where the legal interests of Camp Margaritaville franchisee (the Indemnified Party) and the party providing indemnification (the Indemnifying Party, potentially the franchisor or another entity) diverge significantly, the franchisee has the right to seek their own legal representation. This ensures that the franchisee's interests are protected, especially when the original counsel appointed by the Indemnifying Party may not be able to fully represent both parties due to the conflict.

The appointment of independent counsel is a crucial safeguard for franchisees, allowing them to have legal representation that is solely dedicated to their interests in complex legal situations. However, the FDD stipulates that the conflict of interest must be material and the decision to appoint independent counsel must be commercially reasonable, preventing franchisees from arbitrarily seeking separate representation. This clause balances the rights of both parties involved in the indemnification agreement.