Under what circumstances is a Cinnabon franchisee required to defend, indemnify, and hold harmless the Indemnified Parties?

According to the 2025 Cinnabon Franchise Disclosure Document, a franchisee must defend, indemnify, and hold harmless Cinnabon and its affiliates, successors, assigns, owners, directors, officers, managers, employees, agents, attorneys, and representatives (collectively known as the "Indemnified Parties") against all losses. These losses include obligations, liabilities, damages, and reasonable defense costs that the Indemnified Parties may incur due to third-party claims or inquiries. This obligation arises directly or indirectly from (i) the operation of the Franchised Business; (ii) the business you conduct under this Agreement; (iii) your breach of this Agreement; (iv) your noncompliance or alleged noncompliance with any Law; or (v) any allegation that we or another Indemnified Party is a joint employer or otherwise responsible for your acts or omissions relating to your employees. Defense costs include arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses of litigation, arbitration, or alternative dispute resolution, regardless of whether litigation, arbitration, or alternative dispute resolution is commenced.

However, this indemnification obligation is subject to certain conditions and limitations, particularly for franchisees operating in Washington state. Washington law modifies the standard indemnification clause, stating that a Cinnabon franchisee has no obligation to indemnify the franchisor or other indemnified parties for losses or liabilities caused by the indemnified party's negligence, willful misconduct, strict liability, or fraud. This modification provides significant protection to franchisees against bearing the costs of Cinnabon's own errors or misconduct.

Furthermore, Cinnabon is required to promptly notify the franchisee of any claim that may lead to an indemnity claim. However, failure to provide such notice does not release the franchisee from their obligations unless the franchisee is materially prejudiced by the lack of notice. The franchisee is not obligated to indemnify Cinnabon for losses caused solely and directly by Cinnabon's gross negligence, willful misconduct, or willful wrongful omissions, and Cinnabon will reimburse the franchisee for such losses if determined by a final, unappealable ruling from a competent court or arbitrator. It is important to note that the franchisee's obligation to defend Cinnabon still applies even in these circumstances.