Does the Baya Bar agreement require the developer to reimburse the Baya Bar Indemnitees for costs and expenses as they are incurred?

According to Baya Bar's 2024 Franchise Disclosure Document, the developer is required to reimburse the Baya Bar Indemnitees for costs and expenses as they are incurred. This obligation arises from the indemnification agreement where the developer agrees to hold the Baya Bar Indemnitees harmless.

This means that if a claim, suit, proceeding, or inquiry arises related to the developer's Baya Bar outlets, products, premises, or advertising/business practices, the developer is responsible for covering the losses and expenses incurred by the Baya Bar Indemnitees. These expenses include, but are not limited to, attorney's fees. The Baya Bar Indemnitees have the right to select and appoint independent counsel to represent them in any action covered by this indemnity.

This requirement for immediate reimbursement could place a significant financial burden on the developer. Unlike situations where reimbursement occurs after a final judgment or settlement, the developer must provide funds as costs and expenses arise, potentially straining their cash flow. It is important for prospective developers to fully understand the scope of this indemnification and ensure they have adequate financial resources to meet these obligations as they are incurred.