What is the Carvel franchisee's responsibility regarding keeping Carvel informed about the status of the defense of a claim?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
You shall have the right, upon written notice delivered to the Indemnified Party within 15 days thereafter assuming full responsibility for Losses resulting from such claim, to assume and control the defense of such claim, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of the fees and disbursements of such counsel.
If (i) the Indemnified Party shall have been advised by counsel that there are one or more legal or equitable defenses available to it that are different from or in addition to those available to you and, in the reasonable opinion of the Indemnified Party, the counsel that you have selected could not adequately represent the interests of the Indemnified Party because such interests could be in conflict with your interests, (ii) you do not assume responsibility for such Losses in a timely manner, (iii) the claim involves any elements of the Intellectual Property, or (iv) you fail to defend a claim with counsel reasonably satisfactory to the Indemnified Party as contemplated above, then the Indemnified Party shall have the right to assume the defense of any claims a
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, if a third party makes a claim or inquiry related to the franchisee's business operations, the franchisee may have the right to assume control of the defense of that claim. To do so, the franchisee must provide written notice to the 'Indemnified Party' (which includes Carvel and its affiliates) within 15 days of receiving notice of the claim. This notice must state that the franchisee is assuming full responsibility for any losses resulting from the claim.
By assuming control, the Carvel franchisee is responsible for managing the defense, including hiring counsel that is reasonably satisfactory to Carvel and covering all associated fees and disbursements. However, Carvel retains the right to assume the defense of the claim under certain circumstances. These circumstances include situations where Carvel's legal counsel advises that Carvel has legal or equitable defenses different from those available to the franchisee, where the franchisee does not assume responsibility promptly, where the claim involves Carvel's intellectual property, or where the franchisee fails to defend the claim with satisfactory counsel.
This clause ensures that Carvel is promptly informed of any claims that could impact the brand and allows the franchisee to take control of the defense while protecting Carvel's interests. The 15-day notice requirement is critical for the franchisee to exercise their right to defend the claim. Franchisees should be aware of these conditions and prepared to act quickly to protect their interests and those of Carvel.