What are the immediate notification obligations for Itan franchisees and their owners regarding any claim or proceeding?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- (h) any actions, investigations, rulings or proceedings conducted by any Governmental Authority (including the United States Department of Labor, Equal Employment Opportunity Commission or National Labor Relations Board) relating to your employees.
You and your Owners must immediately notify us of any Claim or proceeding described above. The Indemnified Parties have the right, in their sole discretion, to: (a) retain counsel of their choosing to represent them; and (b) control the response thereto and the defense thereof, including the right to settle the Claim. You may participate in the defense at your expense. You must fully cooperate and assist the Indemnified Parties with defense of the Claim and reimburse all costs and expenses they incur in defending the Claim including, without limitation, mediation, arbitration or court expenses, expert fees and Travel Expenses incurred by attorneys or expert witnesses to attend proceedings or hearings relating to the matter. Your indemnification obligations survive, and continue in full force and effect after, the Transfer, termination or expiration of this Agreement.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, franchisees and their owners have specific obligations to notify Itan immediately regarding certain claims or proceedings. This includes any actions, investigations, rulings, or proceedings conducted by any Governmental Authority relating to the franchisee's employees. Governmental Authorities include entities like the United States Department of Labor, Equal Employment Opportunity Commission, or National Labor Relations Board.
This immediate notification requirement is significant because it allows Itan to take prompt action to protect its brand and interests. After notification, Itan has the right to retain counsel of their choosing to represent them and control the response and defense of the claim, including the right to settle it. While the franchisee can participate in the defense at their own expense, they must fully cooperate and assist Itan in the defense.
The franchisee is also responsible for reimbursing all costs and expenses Itan incurs in defending the claim. These expenses include mediation, arbitration, or court expenses, expert fees, and travel expenses for attorneys or expert witnesses. It's important to note that these indemnification obligations survive even after the transfer, termination, or expiration of the Franchise Agreement, meaning the franchisee's responsibility extends beyond the active term of the agreement. This could create a long-term financial risk for franchisees, as they may be liable for costs arising from past actions even after they are no longer operating the franchise.