Does Checkersrallys have the right to direct the defense of an event for which indemnification may be required from a franchisee?
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's 2025 Franchise Disclosure Document, Checkersrallys has the option to direct the defense of any event that may require indemnification from a franchisee. Checkersrallys will provide reasonable notice of any event that may require indemnification. Checkersrallys can choose to direct the defense, including selecting counsel. However, the franchisee's consent is required for any settlement, and such consent cannot be unreasonably withheld or delayed.
If the franchisee has an insurance policy that covers the event, and the insurer agrees to defend the event, Checkersrallys will not exercise its right to select counsel if it would cause the insurer to deny coverage. However, Checkersrallys retains the right to hire its own counsel to represent its interests in the insured event, but at its own expense.
The franchisee is required to indemnify Checkersrallys for losses or expenses, even if the losses are due to Checkersrallys's negligence. However, the franchisee is not required to indemnify Checkersrallys for liability arising from Checkersrallys's breach of the agreement, gross negligence, or willful acts. This indemnification clause remains in effect even after the franchise agreement expires or is terminated.