What is the Cinnabon franchisor's obligation to notify the franchisee of a claim that may give rise to indemnification?

According to Cinnabon's 2025 Franchise Disclosure Document, Cinnabon will promptly notify the franchisee of any claim that may lead to an indemnity claim. However, the failure to provide this notification does not release the franchisee from their indemnification obligations, unless the franchisee is actually and materially prejudiced by the lack of notice.

In practical terms, this means that if a third party sues Cinnabon and Cinnabon believes the franchisee is responsible for covering the losses, Cinnabon is supposed to inform the franchisee promptly. This allows the franchisee to prepare a defense and potentially mitigate damages.

However, even if Cinnabon fails to provide timely notice, the franchisee is still obligated to indemnify Cinnabon, unless the delay in notification significantly harms the franchisee's ability to defend against the claim. This places the onus on the franchisee to demonstrate that the lack of prompt notification from Cinnabon caused them actual and material prejudice. A prospective franchisee should seek clarification from Cinnabon regarding what constitutes 'actual and material prejudice' in this context to fully understand their obligations and rights.