Does Chicken Guy have an obligation to assume the defense of any action subject to indemnification under the Chicken Guy agreement?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. At Developer's expense and risk, Chicken Guy may elect to assume (but under no circumstances will Chicken Guy be obligated to undertake), the defense and/or settlement of any action, suit, proceeding, claim, demand, investigation, inquiry, judgment or appeal thereof subject to this indemnification.
Such an undertaking shall, in no manner or form, diminish Developer's obligation to indemnify and hold harmless Chicken Guy and Indemnitees.
Chicken Guy shall not be obligated to seek recoveries from third parties or otherwise mitigate losses.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, Chicken Guy is not obligated to assume the defense of any action, suit, proceeding, claim, demand, investigation, inquiry, judgment or appeal subject to indemnification. However, Chicken Guy may elect to assume the defense and/or settlement of any such action at the Developer's expense and risk.
Even if Chicken Guy does elect to assume the defense, this does not diminish the Developer's obligation to indemnify and hold harmless Chicken Guy and its Indemnitees. Chicken Guy is also not obligated to seek recoveries from third parties or otherwise mitigate losses.
This means that as a Chicken Guy franchisee (Developer), you are ultimately responsible for the costs associated with defending against claims arising from your restaurant's operations, unless the gross negligence or willful misconduct of Chicken Guy is involved. While Chicken Guy has the option to take over the defense, they are not required to do so, and even if they do, your indemnification responsibilities remain in place. This could potentially expose you to significant legal expenses and liabilities.