Can an Indemnified Party under the Cicis franchise agreement choose their own legal counsel at the franchisee's expense when defending a claim?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
cation, "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 Cicis's 2025 Franchise Disclosure Document, an indemnified party can indeed choose their own legal counsel at the franchisee's expense when defending a claim. Specifically, each indemnified party has the right to defend any claim against it, which includes selecting and retaining their own legal counsel. They can also agree to settlements or take any other remedial, corrective, or other actions.
This means that if Cicis, or another party they are indemnifying, faces a claim for which the franchisee is responsible under the indemnity provisions, Cicis can hire its own lawyers and the franchisee will have to pay those legal fees. The definition of "claims" is broad, encompassing all obligations, damages, and costs reasonably incurred in defending against any claim, including attorney's fees, investigation costs, and other litigation expenses.
Furthermore, the indemnity remains in effect even after the franchise agreement expires or is terminated. An indemnified party does not need to seek recovery from any insurer or mitigate losses before making a claim against the franchisee, and failure to mitigate losses will not reduce the amount the franchisee owes. The franchisee is required to cooperate with the indemnified party and their counsel in the defense of any claim. The indemnified party must provide written notice of any claim as soon as practicable, but failure to do so only relieves the franchisee of their obligations to the extent they are materially prejudiced by the lack of notice.
This arrangement places a potentially significant financial burden on the franchisee, as they could be responsible for substantial legal costs incurred by Cicis or other indemnified parties. Prospective franchisees should carefully consider the scope of the indemnity provisions and the potential financial risks involved.