What rights does Carvel have if a Carvel franchisee assumes 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 and employ counsel of its own choosing and you shall pay the reasonable fees and disbursements of such Indemnified Party's counsel as incurred; provided that in any case, you shall not be obligated to pay the expenses of more than one separate counsel for all Indemnified Parties taken together.
In connection with any claim, the Indemnified Party or you, whichever is not assuming the defense of such claim, shall have the right to participate in such claim and to retain its own counsel at such party's own expense.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, a franchisee has the right to assume control of the defense of a claim if they provide written notice to Carvel within 15 days of the claim. This includes taking full responsibility for any losses resulting from the claim, employing counsel reasonably satisfactory to Carvel, and covering the fees and disbursements of that counsel. This arrangement allows the franchisee to manage the legal defense while ensuring Carvel's interests are protected through the approval of the chosen counsel.
However, Carvel retains the right to assume the defense of any claims under specific circumstances. These circumstances include if Carvel's counsel advises that there are legal defenses available to Carvel that are different from or in addition to those available to the franchisee, and Carvel believes the franchisee's counsel cannot adequately represent Carvel's interests due to a potential conflict. Carvel can also assume the defense if the franchisee does not take responsibility for the losses in a timely manner, if the claim involves any elements of Carvel's intellectual property, or if the franchisee fails to defend the claim with counsel reasonably satisfactory to Carvel.
If Carvel assumes the defense under these conditions, the franchisee is responsible for paying the reasonable fees and disbursements of Carvel's counsel. However, the franchisee will not be obligated to pay the expenses of more than one separate counsel for all indemnified parties taken together. Regardless of who is defending the claim, the other party has the right to participate in the claim and retain their own counsel at their own expense. Both parties are required to keep each other informed about the status of the defense and cooperate in good faith.