What is the Crave Cookies franchisee's obligation if an Indemnitee delays or fails to notify them of an Action?

According to the 2025 Crave Cookies Franchise Disclosure Document, a franchisee's obligation to indemnify an Indemnitee is not nullified by a delay or failure to notify them of an Action. However, the franchisee is relieved of their indemnity obligation to the extent that the delay or failure materially prejudices them. This means that if the delay in notification significantly harms the franchisee's ability to defend against the Action, their obligation to cover the Indemnitee's losses may be reduced.

In practical terms, this clause protects Crave Cookies and its related entities (Indemnitees) from being held responsible for delays in informing the franchisee about a claim or lawsuit. However, it also provides a degree of protection for the franchisee, ensuring they are not unduly burdened if a delayed notification impairs their defense. The franchisee must demonstrate that they were materially prejudiced by the delay.

This type of clause is relatively common in franchise agreements, as it seeks to balance the interests of both parties in the event of legal claims. Franchisees should carefully consider this clause and understand their rights and obligations regarding indemnification, particularly the need to demonstrate material prejudice resulting from delayed notification. Franchisees should consult with legal counsel to fully understand the implications of this clause.