Does the Cicis franchise agreement require an Indemnified Party to seek recovery from insurers or mitigate losses before making a claim against the franchisee?

According to Cicis's 2025 Franchise Disclosure Document, an Indemnified Party is not required to seek recovery from any insurer or other third party, or otherwise mitigate its losses and expenses, before making a claim against the franchisee. The agreement explicitly states that the Indemnified Party can fully recover a claim from the franchisee without first pursuing other avenues of compensation. Furthermore, the agreement specifies that a failure to pursue recovery or mitigate a loss will not reduce or alter the amounts that the Indemnified Party may recover from the franchisee.

This aspect of the Cicis franchise agreement places a significant financial burden on the franchisee. In the event of a claim against an Indemnified Party, Cicis has the right to seek full compensation from the franchisee without first attempting to recover from insurance policies or other liable parties. This could potentially expose the franchisee to substantial financial liabilities.

However, the FDD also states that 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. This clause provides a slight offset to the previous clause, as it requires the Indemnified Party to make reasonable efforts to control costs related to the claim. This mitigation of controllable costs only applies to the costs incurred by the Indemnified Party, not necessarily the overall losses related to the claim.

Prospective Cicis franchisees should carefully consider the implications of these indemnification provisions and consult with legal counsel to fully understand their potential liabilities. It is important to assess the risks associated with the business and to ensure adequate insurance coverage to protect against potential claims.