If Circle K participates in the defense of a claim, what is the franchisee's obligation regarding cooperation with Circle K and its counsel?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.3 Defense of Claims. Nothing herein will limit Franchisor's right to participate in its defense with counsel of its own choosing. If Franchisor does so, Franchisee will instruct its counsel to cooperate fully with Franchisor and its counsel, including furnishing such information as Franchisor or its counsel may request. Any costs incurred by Franchisor in defending any claims will be paid by Franchisee as provided in Section 17.1.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, if Circle K chooses to participate in the defense of a claim against a franchisee, the franchisee must ensure their counsel fully cooperates with Circle K and its counsel. This cooperation includes providing any information that Circle K or its counsel requests.
This requirement means a Circle K franchisee could incur additional legal expenses to ensure their counsel is adequately cooperating with Circle K's legal team. The franchisee maintains the right to their own legal representation, but that representation must work in tandem with Circle K's defense strategy.
Furthermore, the FDD states that the franchisee is responsible for paying any costs Circle K incurs while defending claims, as provided in Section 17.1. This obligation highlights the importance of understanding the full scope of potential liabilities and the need for comprehensive insurance coverage. Franchisees should carefully review Article 17 to fully understand their indemnification responsibilities.