Can the Baya Bar Developer incur debt on behalf of the Franchisor?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
- 11.1 Independent Licensee. Developer is and shall be an independent licensee under this Agreement, and no partnership shall exist between Developer and Franchisor. This Agreement does not constitute Developer as an agent, legal representative, or employee of Franchisor for any purpose whatsoever, and Developer is not granted any right or authority to assume or create any obligation for or on behalf of, or in the name of, or in any way to bind Franchisor. Developer agrees not to incur or contract any debt or obligation on behalf of Franchisor or commit any act, make any representation or advertise in any manner which may adversely affect any right of Franchisor or be detrimental to Franchisor or other developers or franchisees of Franchisor. Pursuant to the above, Developer agrees to indemnify Franchisor and hold Franchisor harmless from any and all liability, loss, attorney's fees, or damage Franchisor may suffer as a result of claims, demands, taxes, costs or judgments against Franchisor arising out of the relationship hereby established which specifically, but not exclusively, includes costs, losses, expenses, attorneys fees relative to assignment or the transfer of right to develop and transactional costs relative thereto, defaults under any leases, subleases, notes, receipt of revenues or any other relationships arising directly or indirectly out of the development and operation of the Baya Bar outlets.
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the Developer is explicitly prohibited from incurring any debt or obligation on behalf of the Franchisor. The agreement specifies that the Developer operates as an independent licensee and is not granted any authority to act as an agent, legal representative, or employee of Baya Bar for any purpose.
This means that a Baya Bar Developer cannot enter into contracts, loans, or any other financial agreements that would bind the Franchisor. The Developer is responsible for their own financial obligations related to the development and operation of their Baya Bar outlets. This protects Baya Bar from potential liabilities arising from the Developer's actions.
Furthermore, the Developer agrees to indemnify Baya Bar from any liability, loss, attorney's fees, or damage that Baya Bar may incur due to claims, demands, taxes, costs, or judgments against them arising out of the established relationship. This indemnification extends to various aspects, including costs related to the transfer of development rights, defaults under leases, and any other relationships stemming from the development and operation of Baya Bar outlets. This clause reinforces the independent nature of the Developer's business and ensures they are responsible for their own actions and liabilities.