Under what circumstances is Carls required to defend, indemnify, and hold harmless Olo and its officers, directors, and employees from third-party claims and liabilities?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
7.2. Additionally, Customer shall defend, indemnify and hold harmless Olo and and its officers, directors and employees (each, an
"Indemnified Party") from all third-party claims and liabilities (including reasonable outside attorney'sfees) arising out of or relating to (i) any action against Olo arising out of any Customer Third Party Provider's disclosure or misuse of Customer Data or related to Olo's release of such Customer Data, including PII, if the release of such information was requested in writing by Customer; (ii) Customer's failure to properly collect and remit taxes or other government payments or fees associated with its usage of the Services, which shall be the sole responsibility of the Customer and, if applicable, the Authorized Operators; and (iii) the transfer of Customer Data by any means not recommended or deemed reasonably secure by Olo.
7.3.
The Indemnified Party must (a) promptly notify the Indemnifying Party in writing of any third-party claim (provided that a failure to promptly notify will not relieve the Indemnifying Party of its indemnification obligations, except to the extent it has been prejudiced by such failure); (b) reasonably cooperate with the Indemnifying Party in the defense of the matter; and (c) give the Indemnifying Party primary control of the defense of the matter and negotiations for its settlement.
The Indemnified Party may, at its own expense, join in the defense with counsel of its choice.
The Indemnifying Party may not enter into a settlement unless it (i) involves only the payment of monetary damages by the Indemnifying Party, and (ii) includes a complete release of liability in favor of the Indemnified Party; any other settlement will be subject to the written consent of the Indemnified Party (not to be unreasonably withheld).
- 7.4.
Olo's IP Infringement Obligation will not apply to claims to the extent arising from (i) Customer's use of the Licensed Applications or Services in violation of this Agreement, (ii) the Customer Materials' infringement or misappropriation of a third party's trade secret, or U.S. patent, trademark, or copyright, or (iii) the combination, operation, or use of the Service(s) with any product,service or material not provided by Olo or on Olo's behalf.
Customer's IP Infringement Obligation will not apply to claims to the extent arising from (a) Olo's provision of the Service in violation of this Agreement, or (b) Olo's infringement or misappropriation of a third party's trade secret, or U.S. patent, trademark, or copyright.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the customer, identified as an authorized franchisee or licensee of CKE Restaurants Holdings, Inc., must defend, indemnify, and hold harmless Olo and its officers, directors, and employees from third-party claims and liabilities under specific circumstances. These circumstances include claims arising from a Customer Third Party Provider's disclosure or misuse of Customer Data, especially Personally Identifiable Information (PII), or related to Olo's release of such data if the release was requested in writing by the customer.
Carls also has to defend, indemnify, and hold harmless Olo from claims and liabilities arising from the failure to properly collect and remit taxes or other government payments or fees associated with the usage of Olo's services, which is the sole responsibility of the customer and its Authorized Operators. Additionally, Carls is responsible for claims and liabilities related to the transfer of Customer Data by any means not recommended or deemed reasonably secure by Olo.
The FDD also outlines conditions that the Indemnified Party (Olo) must fulfill. Olo must promptly notify the Indemnifying Party (Carls) in writing of any third-party claim, reasonably cooperate with Carls in the defense of the matter, and give Carls primary control of the defense and settlement negotiations. However, failure to promptly notify Carls will not relieve Carls of its indemnification obligations, except to the extent it has been prejudiced by such failure. Olo may join in the defense with its own counsel at its own expense. Carls cannot enter into a settlement unless it involves only monetary damages paid by Carls and includes a complete release of liability in favor of Olo; any other settlement requires Olo's written consent, which cannot be unreasonably withheld.
These indemnification obligations are subject to certain limitations. For example, Olo's IP Infringement Obligation will not apply to claims arising from the customer's use of the Licensed Applications or Services in violation of the agreement, the Customer Materials' infringement or misappropriation of a third party's intellectual property, or the combination, operation, or use of the Service(s) with any product, service, or material not provided by Olo or on Olo's behalf. Similarly, the customer's IP Infringement Obligation will not apply to claims arising from Olo's provision of the Service in violation of the agreement or Olo's infringement or misappropriation of a third party's intellectual property.