Is Bang Cookies required to indemnify a franchisee for damages or expenses in a copyright or patent proceeding?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor shall indemnify, defend, and hold Franchisee and Franchisee's officers, directors, shareholders, members, owners, partners, agents, representatives, independent contractors, employees, assigns and successors (the "Franchisee Indemnified Parties") harmless from all losses, expenses, claims, causes of action, lawsuits, liabilities, taxes, costs, demands, proceedings, investigation, hearing, and/or damages solely arising out of, or solely relating to, Franchisor's gross negligence in the operation of Franchisee's Bang Cookies Shop that was the direct cause of any such loss, expense, liability or damage provided Franchisee immediately notifies Franchisor of such claim, cause of action, lawsuit, demand, proceeding, investigation or hearing, and Franchisor shall pay all of the Franchisee Indemnified Parties' reasonable costs, fees and expenses of defending any such claim, cause of action, lawsuit, demand, proceeding, investigation, and/or hearing brought against any of the Franchisee Indemnified Parties or any such claim, cause of action, lawsuit, demand, proceeding, investigation, and/or hearing in which any of the Franchisee Indemnified Parties is named as a party, including, without limitation, reasonable accountant fees, attorney fees, and expert witness fees, court costs, deposition fees, travel expenses and other litigation expenses provided Franchisee immediately notifies Franchisor of such claim, cause of action, lawsuit, demand, proceeding, investigation or hearing. Franchisor agrees that the terms of this Article 10.C. shall survive the termination, expiration or Transfer of this Agreement.
Source: Item 14 — PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION (FDD pages 39–40)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, Bang Cookies provides indemnification to franchisees under specific conditions. Bang Cookies will indemnify, defend, and hold harmless the franchisee and their related parties from losses, expenses, claims, lawsuits, liabilities, taxes, costs, demands, proceedings, investigations, hearings, and damages. However, this indemnification is specifically limited to situations solely arising out of or relating to Bang Cookies' gross negligence in the operation of the franchisee's Bang Cookies shop, and only if this negligence directly caused the loss, expense, liability, or damage.
To be eligible for indemnification, the franchisee must immediately notify Bang Cookies of any claim, lawsuit, demand, proceeding, or investigation. Bang Cookies is then responsible for covering the reasonable costs, fees, and expenses of defending the franchisee in any such legal actions. This includes accountant fees, attorney fees, expert witness fees, court costs, deposition fees, travel expenses, and other litigation expenses, provided that the franchisee promptly notifies Bang Cookies of the claim or legal action.
Notably, the FDD excerpt does not explicitly state that Bang Cookies will indemnify franchisees in cases involving copyright or patent infringement. The indemnification clause focuses on gross negligence in the shop's operation. Therefore, if a franchisee faces legal action related to copyright or patent issues, this specific clause might not apply unless the issue stems directly from Bang Cookies' gross negligence in how the shop is operated. A prospective franchisee should seek clarification from Bang Cookies regarding indemnification coverage for intellectual property-related claims to fully understand their protection in such scenarios.