Under what circumstances is an Auntie Annes franchisee required to defend, indemnify, and hold harmless the Indemnified Parties?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
- A. Indemnification Obligation. You must defend, indemnify, and hold harmless us and our affiliates, our and their permitted successors and assigns, and each of our and their respective direct and indirect owners, directors, officers, managers, employees, agents, attorneys, and representatives (collectively, the "Indemnified Parties") from and against all Losses (defined below), which any of the Indemnified Parties may suffer, sustain, or incur as a result of a claim asserted or inquiry made formally or informally, or a legal action, investigation, or other proceeding brought, by a third party and directly or indirectly arising out of or relating to: (i) the operation of the Franchised Business; (ii) the business you conduct under this Agreement; (iii) your breach of this Agreement; (iv) your noncompliance or alleged noncompliance with any Law; or (v) any allegation that we or another Indemnified Party is a joint employer or otherwise responsible for your acts or omissions relating to your employees. "Losses" include all obligations, liabilities, damages (actual, consequential, or otherwise), and reasonable defense costs that any Indemnified Party incurs. Defense costs include arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses of litigation, arbitration, or alternative dispute resolution, regardless of whether litigation, arbitration, or alternative dispute resolution is commenced.
- B. Indemnification Procedure. We will promptly notify you of any claim that may give rise to a claim of indemnity hereunder, provided, however, that the failure to provide such notice shall not release you from your indemnification obligations under this Section 13.1, except to the extent you are actually and materially prejudiced by such failure. You shall have the right, upon written notice delivered to the Indemnified Party within 15 days thereafter assuming full
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, franchisees have an indemnification obligation to defend, indemnify, and hold harmless Auntie Annes and its affiliates, successors, assigns, owners, directors, officers, managers, employees, agents, attorneys, and representatives, who are collectively referred to as the "Indemnified Parties". This obligation arises from any losses that the Indemnified Parties may incur due to third-party claims or inquiries.
The franchisee's duty to indemnify covers claims that directly or indirectly arise from several circumstances. These include: the operation of the franchised business, the business the franchisee conducts under the Franchise Agreement, any breach of the Franchise Agreement by the franchisee, the franchisee's noncompliance or alleged noncompliance with any law, or any allegation that Auntie Annes or another Indemnified Party is a joint employer or is otherwise responsible for the franchisee's actions or omissions related to their employees.
The term "Losses" is defined broadly to include all obligations, liabilities, damages (both actual and consequential), and reasonable defense costs incurred by any Indemnified Party. Defense costs specifically include arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses related to litigation, arbitration, or alternative dispute resolution, regardless of whether such proceedings are formally commenced. Auntie Annes will promptly notify the franchisee of any claim that might lead to an indemnity claim; however, failure to provide such notice does not release the franchisee from their obligations unless the franchisee is materially prejudiced by the lack of notice.