Under what circumstances is a Crave Cookies franchisee required to indemnify Crave Cookies Franchising and related parties?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
ARTICLE 16.INDEMNITY
- 16.1 Indemnity. Franchisee shall indemnify and defend (with counsel reasonably acceptable to Crave Cookies Franchising) Crave Cookies Franchising, its parent entities, subsidiaries and affiliates, and their respective owners, directors, officers, employees, agents, successors and assignees (collectively, "Indemnitees") against all Losses in any Action by or against Crave Cookies Franchising and/or any Indemnitee directly or indirectly related to, or alleged to arise out of, the operation of the Business. Notwithstanding the foregoing, Franchisee shall not be obligated to indemnify an Indemnitee from Actions arising as a result of any Indemnitee's intentional misconduct or negligence. Any delay or failure by an Indemnitee to notify Franchisee of an Action shall not relieve Franchisee of its indemnity obligation except to the extent (if any) that such delay or failure materially prejudices Franchisee. Franchisee shall not settle an Action without the consent of the Indemnitee. This indemnity will continue in effect after this Agreement ends.
- 16.2 Assumption. An Indemnitee may elect to assume the defense of any Action subject to this indemnification, and control all aspects of defending the Action, including negotiations and settlement, at Franchisee's expense. Such an undertaking shall not diminish Franchisee's obligation to indemnify the Indemnitees.
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies's 2025 Franchise Disclosure Document, Article 16 outlines the conditions under which a franchisee must indemnify Crave Cookies Franchising and its related entities. Specifically, the franchisee is obligated to indemnify and defend Crave Cookies Franchising, including its parent entities, subsidiaries, affiliates, and their respective owners, directors, officers, employees, agents, successors, and assignees against all losses in any action by or against Crave Cookies Franchising. This indemnification applies to actions directly or indirectly related to, or alleged to arise out of, the operation of the franchisee's business.
However, the franchisee is not required to indemnify Crave Cookies Franchising if the actions arise from the intentional misconduct or negligence of Crave Cookies Franchising or its related entities. Additionally, any delay or failure by Crave Cookies Franchising to notify the franchisee of an action does not relieve the franchisee of their indemnification obligation, except to the extent that such delay materially prejudices the franchisee. The franchisee is also prohibited from settling any action without the consent of Crave Cookies Franchising.
Crave Cookies Franchising also has the option to assume the defense of any action subject to indemnification, controlling all aspects of the defense, including negotiations and settlement, at the franchisee's expense. This assumption of defense does not diminish the franchisee's underlying obligation to indemnify Crave Cookies Franchising. It's important to note that this indemnity obligation remains in effect even after the franchise agreement ends, highlighting the long-term implications for the franchisee.
This section of the FDD is crucial for prospective franchisees to understand, as it defines the scope of their potential liability and the circumstances under which they could be responsible for covering Crave Cookies Franchising's losses. Franchisees should carefully consider these obligations and consult with legal counsel to fully grasp the implications of the indemnity clause.