Under what condition is a Cicis franchisee relieved of their obligation to defend or indemnify if the Indemnified Party fails to give prompt notice of a claim?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, a franchisee's obligation to defend or indemnify an Indemnified Party is not absolute. The franchisee is relieved of this obligation only to the extent that they are materially prejudiced by the Indemnified Party's failure to provide prompt written notice of a claim. The Indemnified Party must provide written notice as soon as practicable, but no more than 10 business days after becoming aware of a claim.
This means that if Cicis or one of its related parties (the Indemnified Party) faces a claim for which they seek defense or indemnification from the franchisee, they must notify the franchisee in writing within 10 business days of becoming aware of the claim. If they fail to do so promptly, the franchisee may be relieved of their duty to defend or indemnify, but only if the delay in notification has caused material harm to the franchisee's ability to defend against the claim.
For a prospective Cicis franchisee, this clause highlights the importance of understanding the indemnification obligations and the procedures for handling claims. It also emphasizes the need to assess the potential for material prejudice if Cicis delays in providing notice of a claim. Franchisees should ensure they have the resources and expertise to evaluate such situations and protect their interests. This is a fairly standard clause in franchise agreements, intended to balance the franchisor's need for protection with the franchisee's right to a fair defense.