Can a Fly To Fit franchisee settle an Action without the Indemnitee's consent?

According to Fly To Fit's 2024 Franchise Disclosure Document, a franchisee is not allowed to settle an Action without obtaining consent from the Indemnitee. The Indemnitee, as defined in the FDD, includes Fly To Fit Franchise, its parent entities, subsidiaries, affiliates, and their respective owners, directors, officers, employees, agents, successors, and assignees. This requirement is part of the indemnity agreement outlined in the franchise contract.

This provision means that if a claim or lawsuit arises related to the operation of the Fly To Fit business, and the franchisee is obligated to indemnify Fly To Fit or related parties, the franchisee cannot independently settle the matter. They must first get approval from Fly To Fit or the specific Indemnitee involved. This gives Fly To Fit control over the resolution of legal matters that could impact the brand or its other related entities.

The FDD also specifies that an Indemnitee may elect to assume the defense of any Action, controlling all aspects of the defense, including negotiations and settlement, at the franchisee's expense. This further emphasizes Fly To Fit's control over legal proceedings and settlements. While the franchisee is responsible for the costs, Fly To Fit has the right to manage the legal strategy and settlement terms.

This type of clause is relatively common in franchise agreements, as it protects the franchisor's brand and reputation. However, it's crucial for a prospective Fly To Fit franchisee to understand that they will not have the autonomy to settle legal claims without the franchisor's consent, even if they are paying for the defense. Franchisees should carefully consider the potential financial implications and ensure they are comfortable with this level of control retained by Fly To Fit.