Under the Angry Chickz franchise agreement, what is the franchisee required to do in relation to indemnifying the Company?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
16.2 Indemnity. Franchisee shall protect, defend and indemnify Company, and all of its past, present and future Owners, Affiliates, officers, directors, employees, attorneys and designees, and each of them, and hold them harmless from and against any and all costs and expenses, including attorneys' fees, court costs, losses, liabilities, damages, claims and demands of every kind or nature on account of any actual or alleged loss, injury or damage to any person or Entity or to any property (including data loss or damage) arising out of or in connection with (i) any breach of this Agreement by Franchisee, any Restricted Person; (ii) Franchisee's development, construction (including latent or patent defects), operation, maintenance of the Franchised Business, the Premises, any real property occupied by the Franchised Business, or the conduct to Franchisee's business; (iii) Franchisee's operation, marketing, advertising, promotion, offer for sale, sale, or provision of any products or services; (iv) any and all alleged torts, negligent acts, breaches of contract, fraud, omissions by Franchisee or its agents, representatives, contractors, or employees; and (v) the alleged failure of Franchisee to comply with Applicable Law. Company shall give Franchisee written notice of any claim for
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, the franchisee has specific obligations to protect and defend the Company against certain liabilities. The franchisee must indemnify Angry Chickz and its associated parties (owners, affiliates, officers, etc.) from any costs, expenses, losses, liabilities, damages, claims, and demands arising from various situations. These situations include any breach of the franchise agreement by the franchisee, issues related to the development, construction, operation, or maintenance of the franchised business, problems stemming from the franchisee's business conduct, or any failure to comply with applicable laws. This means the franchisee is financially responsible for covering legal costs and damages if Angry Chickz faces claims or lawsuits due to the franchisee's actions or failures.
This indemnification clause places a significant financial burden on the Angry Chickz franchisee. For instance, if a customer sues Angry Chickz because of a foodborne illness allegedly caused by the franchisee's restaurant, the franchisee would have to cover Angry Chickz's legal defense costs and any resulting settlement or judgment. Similarly, if the franchisee violates a local health code, leading to fines or legal action against Angry Chickz, the franchisee would be responsible for those expenses. The franchisee's responsibility extends to the actions of their employees and contractors.
Angry Chickz is required to provide the franchisee with written notice of any claim for indemnification. This notification is important because it allows the franchisee to prepare a defense. It is important to note that this section outlines the franchisee's responsibilities and does not detail any reciprocal obligations of Angry Chickz to indemnify the franchisee.
Indemnification clauses are standard in franchise agreements, but the scope of the franchisee's responsibility can vary. Prospective Angry Chickz franchisees should carefully review this section with a legal professional to fully understand the potential financial exposure and ensure they have adequate insurance coverage to mitigate these risks.