What is the Baya Bar Franchisee obligated to do regarding losses related to the Franchise Agreement?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
- 15.6 Indemnification. TO THE FULLEST EXTENT PERMITTED BY LAW, FRANCHISEE AGREES TO EXONERATE AND INDEMNIFY AND HOLD HARMLESS BAYA BAR FRANCHISE SYSTEMS, LLC, BAYA BAR, LLC, AND ANY OF THESE COMPANIES' PARENT COMPANY, SUBSIDIARIES, DIVISIONS, AFFILIATES, SUCCESSORS, ASSIGNS AND DESIGNEES AS WELL AS THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SHAREHOLDERS, SUCCESSORS, DESIGNEES AND REPRESENTATIVES (COLLECTIVELY REFERRED TO AS THE "BAYA BAR INDEMNITEES"), FROM ALL CLAIMS BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATED TO FRANCHISEE'S FRANCHISE AND/OR THE OPERATION THEREOF, INCLUDING BUT NOT LIMITED TO, ANY CLAIM IN CONNECTION WITH FRANCHISEE'S EMPLOYEES OR AGENTS; FRANCHISEE'S COMPUTER SYSTEMS; FRANCHISEE'S PREPARATION, STORAGE, HANDLING AND/OR DISPOSAL OF FOOD OR BEVERAGE PRODUCTS; THE FRANCHISED BUSINESS PREMISES; OR FRANCHISEE'S ADVERTISING OR BUSINESS PRACTICES. FRANCHISEE AGREES TO PAY FOR ALL BAYA BAR INDEMNITEES' LOSSES, EXPENSES (INCLUDING, BUT NOT LIMITED TO ATTORNEYS' FEES) OR CONCURRENT OR CONTRIBUTING LIABILITY INCURRED IN CONNECTION WITH ANY ACTION, SUIT, PROCEEDING, INQUIRY (REGARDLESS OF WHETHER THE SAME IS REDUCED TO JUDGMENT OR DETERMINATION), OR ANY SETTLEMENT THEREOF FOR THE INDEMNIFICATION GRANTED BY FRANCHISEE HEREUNDER. THE BAYA BAR INDEMNITEES SHALL HAVE THE RIGHT TO SELECT AND APPOINT INDEPENDENT COUNSEL TO REPRESENT ANY OF THE BAYA BAR INDEMNITEES IN ANY ACTION OR PROCEEDING COVERED BY THIS INDEMNITY. FRANCHISEE AGREES THAT TO HOLD THE BAYA BAR INDEMNITEES HARMLESS, FRANCHISEE WILL REIMBURSE THE BAYA BAR INDEMNITEES AS THE COSTS AND EXPENSES ARE INCURRED BY THE BAYA BAR INDEMNITEES.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the franchisee has extensive indemnification obligations. Specifically, the franchisee agrees to exonerate, indemnify, and hold harmless Baya Bar Franchise Systems, LLC, Baya Bar, LLC, their parent company, subsidiaries, divisions, affiliates, successors, assigns, designees, as well as their directors, officers, employees, agents, shareholders, successors, designees, and representatives from all claims related to the franchisee's franchise and its operation. This includes claims related to the franchisee's employees or agents, computer systems, the preparation, storage, handling, or disposal of food or beverage products, the franchised business premises, or the franchisee's advertising or business practices.
This indemnification extends to paying for all losses and expenses, including attorneys' fees, incurred by Baya Bar in connection with any action, suit, proceeding, or inquiry related to the indemnification granted by the franchisee. Baya Bar has the right to select and appoint independent counsel to represent any of the indemnitees in any action covered by this indemnity. The franchisee is obligated to reimburse Baya Bar for these costs and expenses as they are incurred.
In practical terms, this means that if a customer sues Baya Bar because of something that happened at the franchisee's location (for example, food poisoning), the franchisee is responsible for covering Baya Bar's legal costs and any damages they have to pay. This is a significant obligation and potential financial risk for the franchisee. Franchisees should consult with a legal and financial advisor to fully understand the scope of this indemnification and how to best protect themselves through insurance and business practices.