Does CJR have an obligation to undertake the defense and/or settlement of any action subject to indemnification by a Carls franchisee?

According to Carls's 2024 Franchise Disclosure Document, Carls is not obligated to undertake the defense and/or settlement of any action subject to indemnification by a franchisee. The franchisee is required to indemnify, defend, and hold harmless CJR (Carls) and its related entities from losses and expenses connected to any action arising from the franchisee's activities, excluding instances of gross negligence or willful misconduct by CJR. The franchisee must promptly notify CJR of any such action and provide relevant documents upon request.

Carls retains the option to assume the defense and/or settlement of any action subject to indemnification at the franchisee's expense and risk, but it is under no obligation to do so. This election by Carls does not diminish the franchisee's responsibility to indemnify and hold harmless Carls and its Indemnitees.

This means that as a Carls franchisee, you are primarily responsible for defending against claims arising from your restaurant's operations. While Carls may choose to step in, it is not required to, and you will likely bear the financial burden of defense and settlement. This arrangement is typical in franchising, where franchisees operate independently and assume liability for their business activities, but it is important to understand the potential costs and responsibilities involved.