What does Cicis require a franchisee to indemnify the Indemnified Parties against?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
C. Alternative Remedies. Without limiting any of our rights set forth above, if at any time we have, but have not yet exercised, our right to terminate this Agreement for any reason, we may, in our sole discretion, in addition to other remedies we might have and without waiving any rights with respect to the default, require that you cease operating your Restaurant until the earlier of the default which serves as the basis for our right to terminate is cured or we exercise our right to terminate. You hereby waive all claims against us and our affiliates arising from any suspension provided for in this Section 15.C, and you hereby indemnify us against any claims brought by any third parties arising out of our exercise of our rights under this Section 15.C, in connection with your indemnity obligations set forth in Section 14 above.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis' 2025 Franchise Disclosure Document, Cicis requires franchisees to indemnify them against claims brought by third parties arising out of the suspension of restaurant operations. This indemnification is specifically related to situations where Cicis has the right to terminate the Franchise Agreement but chooses instead to require the franchisee to cease operations until the default is cured.
This means that if Cicis opts to suspend a franchisee's operations due to a breach of contract, and a third party (such as a supplier, employee, or customer) brings a claim against Cicis as a result of this suspension, the franchisee is responsible for covering Cicis' costs and damages related to that claim. The franchisee is essentially acting as an insurer for Cicis against potential liabilities stemming from the operational suspension.
This requirement could create a significant financial risk for franchisees. If a suspension leads to substantial third-party claims, the franchisee would be obligated to cover those costs, potentially impacting their financial stability. It is important for prospective franchisees to understand the circumstances under which Cicis might suspend operations and the potential liabilities they could face as a result. Franchisees should carefully review the conditions that could lead to a suspension and consider obtaining appropriate insurance coverage to mitigate this risk.