What is the dependency between the Cinnabon franchisee's indemnification obligation and the franchisor's notification of a claim?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
We will promptly notify you of any claim that may give rise to a claim of indemnity hereunder, provided, however, that the failure to provide such notice shall not release you from your indemnification obligations under this Section 13.1, except to the extent you are actually and materially prejudiced by such failure.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, the franchisee's indemnification obligations are not entirely released if the franchisor fails to provide prompt notification of a claim. Specifically, Cinnabon will promptly notify the franchisee of any claim that may lead to an indemnity claim. However, if Cinnabon fails to provide this notice, it does not automatically release the franchisee from their indemnification duties.
The franchisee is only relieved of their indemnification obligations to the extent that they are actually and materially prejudiced by the franchisor's failure to provide timely notice. This means that the franchisee must demonstrate that the lack of prompt notification from Cinnabon directly and significantly harmed their ability to defend against the claim.
This provision is important for prospective Cinnabon franchisees because it clarifies the circumstances under which they can be held responsible for losses incurred by the franchisor due to claims or legal actions. While Cinnabon is expected to provide timely notice of any potential claims, the franchisee cannot simply avoid their indemnification responsibilities based on a minor delay or oversight by the franchisor. The franchisee must prove actual and material harm resulting from the delayed notice to be released from their obligations.