What happens to Checkersrallys' obligation to indemnify or reimburse a franchisee if Checkersrallys undertakes to defend any proceeding arising out of the franchisee's use of any Mark?

According to Checkersrallys's 2025 Franchise Disclosure Document, Checkersrallys is not obligated to indemnify or reimburse a franchisee for legal fees or advisor costs if Checkersrallys chooses to defend any legal proceeding arising from the franchisee's use of any Mark.

Specifically, Checkersrallys retains the right to manage the defense or settlement of any legal matter related to the use of its trademarks. This means Checkersrallys has sole discretion over how these cases are handled.

For a prospective franchisee, this clause has significant implications. While Checkersrallys agrees to indemnify franchisees under certain conditions, this protection is removed if Checkersrallys decides to take control of the legal defense. The franchisee would then be responsible for their own legal costs, even if the issue stems from the authorized use of Checkersrallys's trademarks. It is important for franchisees to understand that they may need to bear legal expenses in such cases, even when acting in compliance with the franchise agreement.

This type of clause is not uncommon in franchise agreements, as franchisors often want to maintain control over trademark-related litigation to protect the brand's reputation and legal standing. However, franchisees should carefully consider the potential financial burden if they need to hire their own counsel in such situations.