Under the Crave Cookies franchise agreement, is a franchisee obligated to indemnify an Indemnitee for actions arising from the Indemnitee's intentional misconduct?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies's 2025 Franchise Disclosure Document, the franchisee is generally required to indemnify Crave Cookies Franchising and its related parties (Indemnitees) against losses related to the operation of the business. However, the franchise agreement specifically states that the franchisee is not obligated to indemnify an Indemnitee for actions arising from the Indemnitee's intentional misconduct or negligence. This means that if Crave Cookies Franchising or its related parties engage in intentional misconduct or negligence, the franchisee is not responsible for covering their losses in any related legal actions.
This provision offers a degree of protection to the franchisee. It prevents Crave Cookies from holding the franchisee liable for the franchisor's own wrongful actions. However, the franchisee remains responsible for their own actions and the actions of their employees in operating the Crave Cookies business.
It is important for a prospective Crave Cookies franchisee to understand the scope of the indemnity clause and the exceptions to it. While the franchisee is not responsible for the Indemnitee's intentional misconduct or negligence, they are still responsible for a wide range of other potential liabilities related to the business. Franchisees should consult with a legal professional to fully understand their obligations under the indemnity clause.