What is the scope of the All Team USER's responsibility to defend ATFC against claims?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
USER shall promptly deliver to ATFC copies of every summons, subpoena, process or notice of or order for appearance in any suit or proceeding in which ATFC may be involved and to cooperate with ATFC's attorneys and insurance carriers in the defense of the same.
- D. Indemnification. USER shall indemnify, defend and hold ATFC harmless from (i) any and all manner of suits, claims or demands resulting from or arising out of USER's acts or omissions or those of its employees or agents, including those under or related to this Funding Agreement or the transactions or relationships contemplated hereby, and (ii) any breach or default by USER under this Funding Agreement.
USER shall reimburse ATFC for any and all costs, damages, liabilities, losses, deficiencies, assessments and expenses, including reasonable attorney's fees and court costs that ATFC may suffer or incur or to which ATFC may be subject by reason of any of the foregoing.
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the USER, which refers to the franchisee, has a significant responsibility to defend All Team (ATFC) against claims. Specifically, the franchisee must indemnify, defend, and hold All Team harmless from any suits, claims, or demands arising from the franchisee's actions, omissions, or those of their employees or agents. This includes situations related to the Funding Agreement or any breach of it.
This obligation extends to reimbursing All Team for any costs, damages, liabilities, losses, deficiencies, assessments, and expenses, including reasonable attorney's fees and court costs, that All Team incurs due to the franchisee's actions or omissions. This means that if a customer, employee, or any third party brings a claim against All Team as a result of something the franchisee or their team did (or failed to do), the franchisee is responsible for covering All Team's legal defense and any resulting financial losses.
Furthermore, the franchisee is required to promptly deliver copies of any legal documents, such as summons, subpoenas, or notices of legal proceedings, to All Team and to cooperate with All Team's attorneys and insurance carriers in the defense of such claims. This ensures that All Team is immediately aware of any potential legal issues and can begin to prepare a defense. The franchisee's cooperation is crucial in these situations, as they possess direct knowledge of the events that led to the claim.
This indemnification clause places a considerable financial burden on the All Team franchisee. It is essential for prospective franchisees to understand the scope of this obligation and to ensure they have adequate insurance coverage and risk management practices in place to mitigate potential liabilities. Franchisees should consult with legal and insurance professionals to fully understand their responsibilities and protect their business interests.