What are the conditions that must be met for Checkersrallys to indemnify a franchisee for costs incurred defending a claim brought against them for authorized use of a Mark?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
- 5.05 Indemnification of Franchisee.We agree to indemnify you against, and to reimburse you for, all damages for which you are held liable in any proceeding arising out of your authorized use of any Mark pursuant to and in compliance with this Agreement and, except as provided herein, for all costs you reasonably incur in defending any such claim brought against you, provided: (i) you timely notified us of such claim pursuant to Section 5.04, and (ii) that you and your Owners and Affiliates are in compliance with this Agreement and all other agreements with us or any of our Affiliates.
We, at our sole discretion, are entitled to prosecute, defend and/or settle any proceeding arising out of your use of any Mark pursuant to this Agreement, and, if we undertake to prosecute, defend and/or settle any such matter, we will have no obligation to indemnify or reimburse you for any fees or disbursements of any legal counsel or other advisors you may have retained.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, Checkersrallys will indemnify a franchisee against damages for which they are held liable in a proceeding arising out of the franchisee's authorized use of any Mark, and reimburse the franchisee for costs reasonably incurred defending such a claim, provided certain conditions are met.
First, the franchisee must have notified Checkersrallys in a timely manner of the claim, as outlined in Section 5.04 of the franchise agreement. This notification requirement ensures that Checkersrallys is promptly informed of any potential legal issues related to the use of its Marks. Second, the franchisee, along with their owners and affiliates, must be in full compliance with the franchise agreement and all other agreements they have with Checkersrallys or its affiliates. This condition emphasizes the importance of adherence to the terms and conditions of the franchise agreement for the franchisee to be eligible for indemnification.
However, Checkersrallys retains the right to prosecute, defend, or settle any proceeding related to the franchisee's use of any Mark under the agreement. If Checkersrallys chooses to undertake such actions, it is not obligated to indemnify or reimburse the franchisee for any fees or disbursements of legal counsel or other advisors the franchisee may have retained. This provision gives Checkersrallys control over the legal proceedings and limits its financial responsibility in cases where it assumes the defense.