Under what conditions can Carvel assume the defense of a claim against a Carvel franchisee?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
r 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. 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;
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel, as the Indemnified Party, has the right to assume the defense of a claim under specific conditions. These conditions include situations where the Indemnified Party's counsel advises that there are legal or equitable defenses available to it that are different from or in addition to those available to the franchisee, and the counsel selected by the franchisee cannot adequately represent the Indemnified Party's interests due to a conflict of interest.
Carvel can also assume the defense if the franchisee does not assume 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 a claim with counsel reasonably satisfactory to Carvel. If Carvel assumes the defense, the franchisee is obligated to pay the reasonable fees and disbursements of Carvel's counsel, although the franchisee is not obligated to pay the expenses of more than one separate counsel for all Indemnified Parties taken together.
In any claim, the party not assuming the defense 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 reasonably informed of the defense's status and cooperate in good faith. This clause ensures Carvel can protect its interests and intellectual property while also allowing the franchisee to stay informed and participate in the defense.