Does the Churchs Chicken Sublessor have to pay a claim before being defended or indemnified by the Sublessee?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Sublessor need not have first paid any such claim in order to be defended or indemnified.
If any action or proceeding is brought against Sublessor by reason of any of the foregoing matters, Sublessee shall upon notice defend the same at Sublessee's expense by counsel reasonably satisfactory to Sublessor and Sublessor shall cooperate with Sublessee in such defense.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to the 2025 Churchs Chicken Franchise Disclosure Document, the Sublessor does not need to pay a claim first in order to be defended or indemnified by the Sublessee. The Sublessee is responsible for defending the Sublessor against any actions or proceedings related to the matters outlined in the sublease agreement. This defense must be conducted by counsel that is reasonably satisfactory to the Sublessor, and the Sublessor is expected to cooperate with the Sublessee in this defense.
This arrangement means that a Churchs Chicken franchisee, as a Sublessee, is obligated to provide a legal defense for the Sublessor in the event of a claim, even before any actual payment or loss is incurred by the Sublessor. This obligation can include covering legal fees and other associated costs. The franchisee should ensure they have sufficient resources or insurance coverage to handle potential indemnification claims.
This requirement protects the Sublessor from potential liabilities and places the responsibility for managing and resolving claims on the Sublessee. It is important for a prospective Churchs Chicken franchisee to fully understand the scope of this indemnification and defense obligation, including the types of claims it covers and the potential financial impact. Franchisees should consult with legal and insurance professionals to assess their risk and ensure they have adequate protection.