Does City Wide's control of the response to a Cyber Event relieve the City Wide Franchisee of their indemnification obligations?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
If a Cyber Event occurs, City Wide reserves the right, but shall not have any obligation, to perform and/or control and/or cause its third-party consultants to perform and/or control all aspects of the response to the Cyber Event including, without limitation, the investigation, containment and resolution of the Cyber Event and all communications.
City Wide's control of the response to a Cyber Event shall not create any liability for City Wide or additional rights for Franchisee, entitle Franchisee to damages or relieve Franchisee of Franchisee's indemnification obligations under Section 7.
Franchisee shall reimburse City Wide for all of City Wide's out-of-pocket costs and expenses incurred in responding to and remedying any Cyber Event if such Cyber Event is conclusively determined to have been caused solely by Franchisee or directly related to Franchisee's Franchised Business operations.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, City Wide's control over the response to a Cyber Event does not relieve the franchisee of their indemnification obligations. The FDD states that even if City Wide takes control of managing a Cyber Event, the franchisee remains responsible for their indemnification duties as outlined in Section 7 of the franchise agreement. This means that the franchisee could still be liable for costs and damages related to the Cyber Event, regardless of City Wide's involvement in managing the situation.
Furthermore, the franchisee is expected to exert their best efforts to protect the Technology System against cyber events, including data breaches and identity theft. The franchisee is also expected to stay compliant with all applicable laws regarding data privacy and security, and to seek advice from their own legal and security consultants to ensure they are operating the franchised business in full compliance with data security safeguards.
However, the franchisee may be required to reimburse City Wide for all out-of-pocket costs and expenses incurred in responding to and remedying any Cyber Event if it is conclusively determined that the Cyber Event was caused solely by the franchisee or directly related to the franchisee's franchised business operations. This creates a potential financial risk for the franchisee, as they could be responsible for covering City Wide's expenses in dealing with a cyber event if the franchisee is found to be at fault.