Can an Indemnified Party settle a claim against it at the Extreme Art Studio franchisee's expense?

Based on the 2024 Extreme Art Studio Franchise Disclosure Document, the franchisee's obligation to indemnify the franchisor for third-party claims is noted, but the document does not explicitly state whether Extreme Art Studio can settle a claim at the franchisee's expense without the franchisee's consent. Section 16.4 mentions the franchisee's obligation to indemnify the franchisor for third-party claims. However, it does not detail the franchisor's authority to settle claims using the franchisee's funds.

Without a clear statement regarding settlement authority, a prospective Extreme Art Studio franchisee faces uncertainty. They may be liable for settlement amounts they did not approve, potentially leading to financial strain. The franchisee could incur unexpected expenses if the franchisor settles a claim for a higher amount than the franchisee deems reasonable.

To clarify this issue, a potential Extreme Art Studio franchisee should ask the franchisor about the specific procedures and limitations regarding claim settlements. Specifically, they should inquire whether the franchisor needs the franchisee's consent before settling a claim and how the settlement amount is determined. Understanding these details is crucial for assessing the potential financial risks associated with the indemnification clause in the franchise agreement.