Under what circumstances is an All Team franchisee required to reimburse ATFC for legal costs?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
U. Attorneys' Fees. If ATFC or any of the Affiliates are required to enforce or defend this Agreement in any judicial proceeding or appeal thereof, FRANCHISEE shall reimburse ATFC and Affiliates for its costs and expenses, including, but not limited to, reasonable accountants', attorneys', attorney assistants', and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses, whether incurred prior to, in preparation for or in contemplation of the filing of any written demand, claim, action, hearing or proceeding to enforce or defend this Agreement.
B. Indemnification. Under no circumstances shall ATFC be liable for any act, omission, debt, or other obligation of FRANCHISEE. FRANCHISEE will indemnify, defend and save harmless ATFC and its employees, agents, officers, directors, parents, subsidiaries, affiliates, successors and assigns ("Indemnitees") from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, costs and expenses (including without limitation legal fees and expenses) of any kind and nature whatsoever, including without limitation damages or injuries suffered by Indemnitees, which may be imposed on, incurred by or asserted against the Indemnitees in any way arising out of the acts or omissions of FRANCHISEE or its employees, agents, officers, directors, parents, subsidiaries, affiliates, successors and assigns ("Indemnitors") pursuant to or in connection with the operation of the Agency regardless of whether the Indemnities were negligent or that said negligence was a contributing factor in the liability (to the extent permitted by law).
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, a franchisee may be required to reimburse ATFC for legal costs under specific circumstances. If All Team or its affiliates are required to enforce or defend the franchise agreement in any judicial proceeding or appeal, the franchisee must reimburse All Team for costs and expenses. These costs include reasonable accountants', attorneys', attorney assistants', and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses, and travel and living expenses. This obligation applies whether these costs are incurred before, during, or in anticipation of any written demand, claim, action, hearing, or proceeding to enforce or defend the agreement.
Additionally, the franchisee is obligated to indemnify, defend, and hold harmless All Team and its related parties from any liabilities, obligations, losses, damages, penalties, claims, actions, costs, and expenses, including legal fees and expenses. This indemnification applies to any issues arising from the franchisee's acts or omissions or those of their employees and agents in connection with the operation of the All Team agency. This requirement exists regardless of whether All Team was negligent or if their negligence contributed to the liability, to the extent permitted by law.
These provisions mean that an All Team franchisee could face significant financial exposure for legal costs if they breach the franchise agreement or if their business operations lead to legal claims against All Team. Franchisees should understand these potential liabilities and ensure they operate their businesses in compliance with the franchise agreement and all applicable laws to minimize the risk of incurring such costs. It is common in franchising for the franchisee to bear responsibility for legal costs arising from their own actions, but the breadth of the indemnification clause in the All Team agreement warrants careful consideration.