What is the Chocolate Bash franchisee's obligation regarding defending Indemnitees against Losses in any Action?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall indemnify and defend (with counsel reasonably acceptable to CB Franchising) CB Franchising, its parent entities, subsidiaries and affiliates, and their respective owners, directors, officers, employees, agents, successors and assignees (collectively, "Indemnitees") against all Losses in any Action by or against CB Franchising and/or any Indemnitee directly or indirectly related to, or alleged to arise out of, the operation of the Business. Notwithstanding the foregoing, Franchisee shall not be obligated to indemnify an Indemnitee from Actions arising as a result of any Indemnitee's intentional misconduct or negligence. Any delay or failure by an Indemnitee to notify Franchisee of an Action shall not relieve Franchisee of its indemnity obligation except to the extent (if any) that such delay or failure materially prejudices Franchisee. Franchisee shall not settle an Action without the consent of the Indemnitee. This indemnity will continue in effect after this Agreement ends.
- 16.2 Assumption. An Indemnitee may elect to assume the defense of any Action subject to this indemnification, and control all aspects of defending the Action, including negotiations and settlement, at Franchisee's expense. Such an undertaking shall not diminish Franchisee's obligation to indemnify the Indemnitees.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, a franchisee is obligated to indemnify and defend Chocolate Bash and its related parties (Indemnitees) against all losses in any action that is directly or indirectly related to the operation of the Chocolate Bash business. This defense must be conducted with counsel reasonably acceptable to Chocolate Bash. Losses include all losses; damages; fines; charges; expenses; lost profits; reasonable attorneys' fees; travel expenses, expert witness fees; court costs; settlement amounts; judgments; loss of CB Franchising's reputation and goodwill; costs of or resulting from delays; financing; costs of advertising material and media time/space and the costs of changing, substituting or replacing the same; and any and all expenses of recall, refunds, compensation, public notices and other such amounts incurred in connection with the matters described.
However, the franchisee is not required to indemnify an Indemnitee from actions arising from the Indemnitee's intentional misconduct or negligence. If an Indemnitee delays notifying the franchisee of an action, the franchisee's obligation to indemnify is only relieved to the extent that the delay materially prejudices the franchisee. The franchisee cannot settle any action without the Indemnitee's consent.
The Indemnitee has the option to assume the defense of any action and control all aspects of the defense, including negotiations and settlement, at the franchisee's expense. This does not reduce the franchisee's obligation to indemnify the Indemnitees. This obligation to indemnify continues even after the franchise agreement ends.