Does the Baya Bar franchisee's indemnification obligation extend to claims related to the franchisee's advertising or business practices?
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's indemnification obligation does extend to claims related to their advertising or business practices. Specifically, the franchisee agrees to indemnify Baya Bar from claims arising out of or related to the franchisee's franchise operation. This includes, but is not limited to, claims connected to the franchisee's employees or agents, computer systems, the preparation, storage, handling, or disposal of food or beverage products, the franchised business premises, and the franchisee's advertising or business practices.
This means that a Baya Bar franchisee could be financially responsible for covering Baya Bar's losses, expenses, and liabilities, including attorney's fees, if a claim is made against Baya Bar due to the franchisee's actions or omissions in these areas. This indemnification applies to any action, suit, proceeding, or inquiry, regardless of whether it results in a judgment or settlement.
The FDD specifies that Baya Bar has 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. The franchisee is obligated to reimburse Baya Bar for costs and expenses as they are incurred. This clause highlights the importance of franchisees adhering to Baya Bar's standards and guidelines in all aspects of their business operations, including advertising and general business conduct, to minimize the risk of potential claims and associated financial burdens.