What claims, obligations, and damages does a Cicis franchisee agree to indemnify the Indemnified Parties against?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of this indemnification, "claims" include all obligations, damages (actual, consequential, or otherwise), and costs that any Indemnified Party reasonably incurs in defending any claim against it, including, without limitation, reasonable accountants', arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses of litigation or alternative dispute resolution, regardless of whether litigation or alternative dispute resolution is commenced.
Each Indemnified Party may defend any claim against it at your expense (including choosing and retaining its own legal counsel) and agree to settlements or take any other remedial, corrective, or other actions.
This indemnity will continue in full force and effect subsequent to and notwithstanding this Agreement's expiration or termination.
An Indemnified Party need not seek recovery from any insurer or other third party, or otherwise mitigate its losses and expenses, in order to maintain and recover fully a claim against you under this subparagraph.
You agree that a failure to pursue a recovery or mitigate a loss will not reduce or alter the amounts that an Indemnified Party may recover from you under this subparagraph.
- B.
Indemnification Procedure.
If a claim is commenced for which defense or indemnity is claimed to be due under Section 14.A or if an Indemnified Party becomes aware of facts which, if not corrected, might give rise to a right of defense or indemnification under that section, the Indemnified Party must give written notice thereof to you as soon as practicable but in no event more than 10 business days following the date on which the Indemnified Party becomes aware of such a claim.
Failure to give prompt notice will not relieve you of your obligation to defend or indemnify except to the extent you are materially prejudiced by such failure.
The Indemnified Party will reasonably cooperate with you and you counsel, at your expense, in the defense of the relevant claim.
In all cases, the Indemnified Party will use commercially reasonable efforts to mitigate the controllable costs it incurs in connection with any claims that are subject to indemnification under this Section 14.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to the 2025 Cicis Franchise Disclosure Document, the franchisee's indemnification responsibilities cover all obligations, damages, and costs that an Indemnified Party reasonably incurs while defending any claim against it. These costs include actual, consequential, or other damages, as well as reasonable accountants', arbitrators', attorneys', and expert witness fees. It also covers costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses related to litigation or alternative dispute resolution, regardless of whether formal proceedings are initiated.
This means a Cicis franchisee is responsible for covering a wide array of expenses if a claim is brought against the Indemnified Parties (which typically include Cicis itself, its affiliates, and their employees) due to the franchisee's actions or omissions. The franchisee is liable for these costs even if Cicis chooses to defend the claim itself, including selecting its own legal counsel. The franchisee's obligation to indemnify continues even after the franchise agreement expires or is terminated.
The Indemnified Party is not required to seek recovery from any insurer or mitigate losses before making a claim against the franchisee. Furthermore, the franchisee cannot reduce the amounts they owe by arguing that the Indemnified Party failed to pursue recovery from another source or mitigate their losses. This places a significant financial burden on the franchisee, as they are essentially the primary insurer for any claims arising from their business operations that could involve the Indemnified Parties.
The Indemnified Party must provide written notice of any claim for which defense or indemnity is sought within 10 business days of becoming aware of the claim. Failure to provide prompt notice will only relieve the franchisee of their obligation to defend or indemnify if the delay materially prejudices them. The Indemnified Party is expected to make commercially reasonable efforts to mitigate controllable costs associated with indemnification claims. The franchisee must cooperate with the Indemnified Party and their counsel in defending any relevant claim.