Under the Baya Bar agreement, what is the relationship between the Developer and 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 considered an independent licensee, and no partnership exists between the Developer and Baya Bar. The agreement explicitly states that the Developer is not an agent, legal representative, or employee of Baya Bar for any purpose. The Developer has no right to assume or create any obligation on behalf of Baya Bar, nor can they bind Baya Bar in any way.
This means the Developer operates their Baya Bar outlets independently and is responsible for all debts, obligations, and liabilities incurred in the operation of the business. The Developer must also indemnify Baya Bar from any claims, losses, attorney's fees, or damages arising from the established relationship, including costs related to the transfer of development rights, defaults under leases, and revenue receipts.
Baya Bar retains rights to offer other products or services, including other food and beverage concepts, through different channels such as retail outlets, captive market locations, and the Internet, even within the Developer's designated area. The Developer's rights to operate a Baya Bar outlet and use the Baya Bar system and marks are derived only through the execution of a Franchise Agreement for each outlet to be established.
This arrangement is typical in franchising, where franchisees operate independently while adhering to the franchisor's system and standards. The indemnification clause is a standard protection for franchisors, ensuring they are not held liable for the actions of their franchisees. Prospective Baya Bar developers should carefully consider these terms and understand their obligations and liabilities as independent operators.