What are considered 'Losses' that a Carvel franchisee must indemnify against?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
13. INDEMNIFICATION; INSURANCE
13.1 Indemnification.
- A.
Indemnification Obligation.
You must defend, indemnify, and hold harmless us and our affiliates, our and their permitted successors and assigns, and each of our and their respective direct and indirect owners, directors, officers, managers, employees, agents, attorneys, and representatives (collectively, the "Indemnified Parties") from and against all Losses (defined below), which any of the Indemnified Parties may suffer, sustain, or incur as a result of a claim asserted or inquiry made formally or informally, or a legal action, investigation, or other proceeding brought, by a third party and directly or indirectly arising out of or relating to: (i) the operation of the Franchised Business; (ii) the business you conduct under this Agreement; (iii) your breach of this Agreement; (iv) your noncompliance or alleged noncompliance with any Law; or (v) any allegation that we or another Indemnified Party is a joint employer or otherwise responsible for your acts or omissions relating to your employees. "Losses" include all obligations, liabilities, damages (actual, consequential, or otherwise), and reasonable defense costs that any Indemnified Party incurs.
Defense costs include arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses of litigation, arbitration, or alternative dispute resolution, regardless of whether litigation, arbitration, or alternative dispute resolution is commenced.
- B.
Indemnification Procedure.
We will promptly notify you of any claim that may give rise to a claim of indemnity hereunder, provided, however, that the failure to provide such notice shall not release you from your indemnification obligations under this Section 13.1, except to the extent you are actually and materially prejudiced by such failure.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, franchisees are required to defend, indemnify, and hold harmless Carvel and its affiliates from any 'Losses' that the Indemnified Parties may suffer or incur. These losses must result from a third-party claim, inquiry, legal action, investigation, or other proceeding that directly or indirectly arises out of or relates to specific aspects of the franchisee's business.
The specific triggers for indemnification include the operation of the franchised business, the business conducted under the Franchise Agreement, any breach of the Franchise Agreement by the franchisee, noncompliance or alleged noncompliance with any law, or any allegation that Carvel or another Indemnified Party is a joint employer or otherwise responsible for the franchisee's acts or omissions relating to their employees. The FDD specifies that 'Losses' encompass all obligations, liabilities, damages (actual, consequential, or otherwise), and reasonable defense costs incurred by any Indemnified Party.
Defense costs that Carvel franchisees may be responsible for include arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses related to litigation, arbitration, or alternative dispute resolution. This applies regardless of whether litigation, arbitration, or alternative dispute resolution is formally commenced. Carvel will promptly notify the franchisee of any claim that may give rise to a claim of indemnity; however, failure to provide such notice does not release the franchisee from their indemnification obligations, except to the extent the franchisee is materially prejudiced by such failure.