Does the indemnification obligation of the Franchisee to Bambu continue after the expiration or termination of the Bambu MUD Agreement?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall indemnify and hold harmless Bambu and its officers, directors, members, managers, agents and representatives ("Indemnified Parties") from all fines, suits, proceedings, claims, demands or actions of any kind or nature, including reasonable attorneys' fees, from anyone whomsoever, directly or indirectly, arising or growing out of, or otherwise connected with Franchisee's activities, actions or failure to act, under this MUD Agreement or Franchisee's operation of its shoppes developed under this MUD Agreement. For purposes of this indemnification, claims shall mean and include all obligations, actual and consequential damages and costs reasonably incurred in the defense of any claim against the Indemnified Parties, including, without limitation, reasonable accountants', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other arbitration or litigation expenses and travel and living expenses. Bambu shall have the right to defend any such claim against it. This indemnity shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this MUD Agreement.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, the franchisee's obligation to indemnify Bambu extends beyond the termination or expiration of the MUD Agreement. This means that even after the agreement ends, the franchisee remains responsible for covering Bambu's losses, damages, and expenses arising from the franchisee's actions or inactions during the term of the MUD Agreement or the operation of their shoppes. This obligation includes covering legal costs such as attorney's fees.
This continued indemnification is a significant point for prospective Bambu franchisees. It implies that even after ceasing operations, a franchisee could still face financial liabilities stemming from their past business activities. This could include potential lawsuits, claims, or proceedings related to the operation of the Bambu shoppe.
The FDD specifies that Bambu has the right to defend any claim made against it, further emphasizing the franchisee's responsibility to cover these costs. Franchisees should carefully consider this long-term liability and factor it into their risk assessment before entering into a MUD Agreement with Bambu. It is common in franchise agreements to have clauses that extend certain obligations beyond the termination date, particularly those related to financial liabilities and legal compliance.
Therefore, it is crucial for potential franchisees to fully understand the scope of this indemnification clause and to seek legal counsel to assess the potential risks and liabilities associated with it. Understanding the types of claims that could arise and the potential costs involved is essential for making an informed decision about investing in a Bambu franchise.