Who has the right to control the response and defense, including settlement, of any claim against Itan, and what options does the franchisee have?
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, Itan maintains the right to control the response and defense of any claim. Specifically, if a claim or proceeding arises related to the franchisee's employees or other specified areas, Itan has the sole discretion to retain counsel and manage the defense, including settling the claim.
While Itan controls the defense, the franchisee has the option to participate in the defense at their own expense. However, the franchisee is obligated to fully cooperate and assist Itan in defending the claim. This includes reimbursing all costs and expenses incurred by Itan, such as mediation, arbitration, court expenses, expert fees, and travel expenses for attorneys or expert witnesses.
This indemnification obligation extends beyond the term of the franchise agreement, remaining in effect even after the transfer, termination, or expiration of the agreement. This means that even after the franchisee is no longer operating an Itan franchise, they may still be responsible for costs associated with claims arising from their period of operation.