Under what conditions can the Indemnified Party assume the defense of a claim against a Cinnabon franchisee?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
If (i) the Indemnified Party shall have been advised by counsel that there are one or more legal or equitable defenses available to it that are different from or in addition to those available to you and, in the reasonable opinion of the Indemnified Party, the counsel that you have selected could not adequately represent the interests of the Indemnified Party because such interests could be in conflict with your interests, (ii) you do not assume responsibility for such Losses in a timely manner, (iii) the claim involves any elements of the Intellectual Property, or (iv) you fail to defend a claim with counsel reasonably satisfactory to the Indemnified Party as contemplated above, then the Indemnified Party shall have the right to assume the defense of any claims and employ counsel of its own choosing and you shall pay the reasonable fees and disbursements of such Indemnified Party's counsel as incurred; provided that in any case, you shall not be obligated to pay the expenses of more than one separate counsel for all Indemnified Parties taken together.
In connection with any claim, the Indemnified Party or you, whichever is not assuming the defense of such claim, shall have the right to participate in such claim and to retain its own counsel at such party's own expense.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, the Indemnified Party, which includes Cinnabon and its affiliates, has the right to assume the defense of a claim under specific conditions. These conditions include instances where the Indemnified Party's counsel advises that there are legal defenses available to them that are different from or in addition to those available to the franchisee, and the counsel selected by the franchisee cannot adequately represent the Indemnified Party's interests due to a potential conflict of interest.
Additionally, Cinnabon can assume the defense if the franchisee does not take responsibility for the losses in a timely manner, if the claim involves any elements of Cinnabon's Intellectual Property, or if the franchisee fails to defend a claim with counsel reasonably satisfactory to Cinnabon.
In such cases, Cinnabon has the right to assume the defense of any claims and employ counsel of its own choosing. The franchisee is then responsible for paying the reasonable fees and disbursements of Cinnabon's counsel as incurred, but the franchisee will not be obligated to pay the expenses of more than one separate counsel for all Indemnified Parties taken together. Both the franchisee and Cinnabon have the right to participate in any claim and retain their own counsel at their own expense, regardless of who is assuming the defense.