What is the Endless Summer Sweets franchisee required to do regarding counsel in the event of a legal action?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Our out-of-pocket | When billed | We may cure your non-compliance on | |
| costs and internal | your behalf (for example, if you do not | ||
| cost allocation, plus | have required insurance, we may purchase | ||
| 10% | insurance for you), and you will owe our | ||
| costs plus a 10% administrative fee. | |||
| $10,000 plus any | Payable only if you sell your business. | ||
| broker fees and other | |||
| out-of-pocket costs | |||
| we incur | |||
| An amount equal to | |||
| royalty fees and | |||
| marketing fund | |||
| contributions for the | |||
| lesser of (i) 2 years | |||
| or (ii) the remaining | |||
| weeks of the | |||
| franchise term. | |||
| Our costs and losses | You must indemnify and defend (with | ||
| from any legal | counsel reasonably acceptable to us) us | ||
| action related to the | and our affiliates against all losses in any | ||
| operation of your | action by or against us related to, or | ||
| franchise | alleged to arise out of, the operation of | ||
| your franchise (unless caused by our | |||
| misconduct or negligence). |
Source: Item 7 — Estimated Initial Investment (FDD pages 10–14)
What This Means (2024 FDD)
According to Endless Summer Sweets's 2024 Franchise Disclosure Document, franchisees are responsible for defending Endless Summer Sweets and its affiliates against any losses from legal actions related to the operation of their franchise. This defense must be conducted with legal counsel that is reasonably acceptable to Endless Summer Sweets.
This obligation to indemnify and defend Endless Summer Sweets means that if a legal claim arises from the franchisee's operations, the franchisee is responsible for covering Endless Summer Sweets's legal costs and any resulting losses. The requirement for counsel to be "reasonably acceptable" to Endless Summer Sweets gives them some control over the franchisee's choice of legal representation, ensuring competence and alignment of legal strategy.
However, there is an exception: franchisees are not responsible for losses caused by the misconduct or negligence of Endless Summer Sweets itself. This provides some protection to the franchisee, ensuring they are not liable for Endless Summer Sweets's own mistakes. This type of clause is common in franchise agreements, as franchisors seek to protect themselves from liabilities arising from the actions of their franchisees, while franchisees need assurance they aren't liable for the franchisor's actions.