Does the Azal Coffee franchisee's indemnification obligation apply to proceedings that allegedly arise out of the construction of the Franchise Business?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
You agree to defend, indemnify, and hold harmless us, our affiliates, and our and their officers, directors, managers, employees, agents, attorneys, shareholders, owners, members, designees, representatives, successors, and assigns (the "Indemnitees") to the fullest extent permitted by law, from and against all claims, losses, liabilities and costs incurred in connection with any civil, criminal, or governmental action, suit, proceeding, claim, demand, investigation, or formal or informal inquiry ("Proceeding") (regardless of whether any of the foregoing is reduced to judgment) or any settlement of the foregoing, which actually or allegedly, directly or indirectly, arises out of, is based on, is a result of, or is related in any way to any element of the establishment, construction, opening and operation of the Franchise Business, including: any personal injury, death or property damage suffered by any customer, visitor, operator, employee or guest of the Franchise Business; crimes committed on or near the Franchise Location or vehicles used by the Franchise Business; all acts, errors, neglects or omissions engaged in by you, your contractors or subcontractors, as well as any third party, arising out of or related to the design, construction, conversion, build-out, outfitting, remodeling, renovation or upgrading of the Franchise Location, whether or not any of the foregoing was approved by us; defects in any premises constructed by or operated by you, whether or not discoverable by you or us; all acts, errors, neglects, and omissions of you or the Franchise Business and/or the owners, members, officers, directors, management, employees, agents, servants, contractors, partners, proprietors, affiliates or representatives of you or the Franchise Business (or any third party acting on your behalf or at your direction), whether in connection with the Franchise Business or otherwise, including any property damage, injury, or death suffered or caused by any delivery person or vehicle serving the Franchise Business; all liabilities arising from or related to the offer, sale and/or delivery of products and/or services by you or the Franchise Business; and any action by any customer of or visitor to the Franchise Business.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, franchisees are required to indemnify the franchisor and related parties against claims, losses, liabilities, and costs related to the establishment, construction, opening, and operation of the Franchise Business. This indemnification extends to any civil, criminal, or governmental action, suit, proceeding, claim, demand, investigation, or formal or informal inquiry, regardless of whether it results in a judgment.
Specifically, the franchisee's indemnification obligation includes, but is not limited to, claims arising from personal injury, death, or property damage suffered by anyone at the Franchise Business, crimes committed on or near the location, and acts or omissions by the franchisee, their contractors, or subcontractors related to the design, construction, conversion, build-out, remodeling, renovation, or upgrading of the Franchise Location. This applies whether or not Azal Coffee approved of the work. It also covers defects in premises constructed or operated by the franchisee, regardless of discoverability.
This means that as an Azal Coffee franchisee, you could be held responsible for covering legal costs and damages resulting from issues related to the construction or operation of your franchise, even if those issues involve third parties or were not directly caused by your actions. This is a significant obligation that could potentially expose you to substantial financial risk. Franchisees should carefully review this section with a legal advisor to fully understand the scope of their indemnification responsibilities and consider obtaining appropriate insurance coverage to mitigate these risks.