What is Checkersrallys' obligation regarding notice to the franchisee of an event for which indemnification may be required?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
We agree to give you reasonable notice of any event of which we become aware for which indemnification may be required, and we may elect (but are not obligated) to direct the defense thereof, including the selection of appropriate counsel at our sole determination. We may, in our reasonable discretion, take such actions as we deem necessary and appropriate to investigate, defend, or settle any event or take other remedial or corrective actions with respect thereto as may be necessary for the protection of indemnitees or Restaurants generally, provided however, that any settlement shall be subject to your consent, which consent shall not be unreasonably withheld or delayed. Further, notwithstanding the foregoing, if the insurer on a policy or policies obtained in compliance with your Franchise Agreement agrees to undertake the defense of an event (an "Insured Event"), we agree not to exercise our right to select counsel to defend the event if such would cause your insurer to deny coverage. We reserve the right to retain counsel to represent us with respect to an Insured Event at our sole cost and expense. This Section shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys' 2025 Franchise Disclosure Document, Checkersrallys is obligated to provide the franchisee with reasonable notice of any event of which they become aware that may require indemnification. This means that if Checkersrallys is involved in a situation where the franchisee might have to cover their losses, liabilities, or expenses, Checkersrallys must inform the franchisee about it in a timely manner.
Checkersrallys also has the option, but not the obligation, to manage the defense of such events, including selecting legal counsel. However, any settlement reached must have the franchisee's consent, which cannot be unreasonably withheld or delayed. This ensures the franchisee has a say in how the situation is resolved, especially when it involves their potential financial responsibility.
Furthermore, if the franchisee's insurance policy covers the event, Checkersrallys agrees not to choose counsel if doing so would cause the insurer to deny coverage. Checkersrallys retains the right to have their own counsel at their own expense for insured events. This obligation regarding notice and the stipulations around managing the defense and settlements remain in effect even after the franchise agreement expires or is terminated.