Under what circumstances is an Even Hotels franchisee required to defend HotelKey Indemnitees against third-party claims?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
Hotel will, at HotelKey's election, defend HotelKey, its Affiliates, and their respective officers, directors, employees, and agents (collectively, "HotelKey Indemnitees") against any and all third-party claims, investigations, lawsuits, proceedings, litigation, and causes of action (collectively "Claims") and Hotel will indemnify and hold the HotelKey Indemnitees harmless from any and all losses, liabilities, penalties, fines, taxes, deficiencies, taxes, interest, expenses, costs, assessments, and damages (collectively, "Losses") arising out of or relating to (a) a breach by Hotel of this Agreement, or (b) PMS Data (including any failure of Hotel to obtain any necessary rights, consents, licenses, permissions, or authorisations relating to the PMS Data).
Hotel will not enter into any settlement or otherwise compromise any Claim where indemnification could be sought under this Section 9.0 (Indemnification) without HotelKey's prior written consent.
Where a HotelKey Indemnitee is entitled to indemnification but there is no third party claim, Hotel shall indemnify the HotelKey Indemnitee and pay all such Losses promptly after receipt of a written demand from HotelKey.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, a franchisee (referred to as "Hotel") is required to defend HotelKey Indemnitees against third-party claims under specific circumstances. These circumstances involve any claims, investigations, lawsuits, proceedings, litigation, and causes of action (collectively, "Claims") brought by a third party against HotelKey, its affiliates, and their respective officers, directors, employees, and agents (collectively, "HotelKey Indemnitees").
The franchisee's obligation to defend HotelKey Indemnitees arises if the claim is related to (a) a breach of the License Agreement by the Hotel or (b) issues pertaining to PMS (Property Management System) Data. This includes any failure by the Hotel to secure the necessary rights, consents, licenses, permissions, or authorizations related to the PMS Data. In such instances, the Hotel is responsible for defending HotelKey Indemnitees against these claims and holding them harmless from any associated losses, liabilities, penalties, fines, taxes, deficiencies, interest, expenses, costs, assessments, and damages (collectively, "Losses").
This obligation means that if a third party sues HotelKey due to the franchisee's actions or data management, the franchisee must take on the legal defense. Furthermore, the franchisee cannot settle or compromise any claim where indemnification is sought without HotelKey's prior written consent. This requirement highlights the importance of adhering to the agreement terms and properly managing PMS Data to avoid potential legal liabilities and the costs associated with defending HotelKey against third-party claims. If there is no third-party claim, the franchisee must still indemnify HotelKey Indemnitee and pay all losses promptly after receiving a written demand from HotelKey.