Under the Baya Bar agreement, is there a limit to the extent of indemnification required by the developer?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
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- INDEMNIFICATION. TO THE FULLEST EXTENT PERMITTED BY LAW. DEVELOPER AGREES TO EXONERATE AND INDEMNIFY AND HOLD HARMLESS BAYA BAR FRANCHISE SYSTEMS, LLC, BAYA BAR, LLC, AND ANY OF THE ABOVE'S 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 THE DEVELOPMENT, OPERATION, CONDITION, OR ANY PART OF ANY OF DEVELOPER'S BAYA BAR OUTLETS TO BE DEVELOPED HEREUNDER, THE PRODUCTS, THE PREMISES, OR ANY ASPECT OF THE REAL ESTATE CONNECTED TO ANY OF SUCH BAYA BAR OUTLETS, WHETHER CAUSED BY DEVELOPER'S AGENTS OR EMPLOYEES, OR ARISING FROM DEVELOPER'S ADVERTISING OR BUSINESS PRACTICES. DEVELOPER AGREES TO PAY FOR ALL THE 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 DEVELOPER 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. DEVELOPER AGREES THAT TO HOLD THE BAYA BAR INDEMNITEES HARMLESS, DEVELOPER WILL REIMBURSE THE BAYA BAR INDEMNITEES AS THE COSTS AND EXPENSES ARE INCURRED BY THE BAYA BAR INDEMNITEES.
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to the 2024 Baya Bar Franchise Disclosure Document, the developer's indemnification obligations are defined with the phrase "TO THE FULLEST EXTENT PERMITTED BY LAW." This means that Baya Bar franchisees are expected to cover the brand for claims related to the development, operation, or condition of their Baya Bar outlets, but only to the degree allowed by applicable laws.
This indemnification extends to claims arising from the franchisee's Baya Bar outlets, products, premises, or any real estate aspects, including those caused by the franchisee's agents or employees, or from their advertising or business practices. The franchisee is responsible for covering all losses and expenses, including attorney's fees, incurred by Baya Bar in connection with any legal actions or settlements related to this indemnification.
Baya Bar retains the right to select independent counsel to represent its interests in any action covered by this indemnity, and the franchisee is obligated to reimburse Baya Bar for these costs as they are incurred. This clause ensures Baya Bar is protected from liabilities associated with the franchisee's business operations, while the "fullest extent permitted by law" provision offers some safeguard against excessive or unreasonable claims beyond what the law allows.
A prospective Baya Bar franchisee should seek legal counsel to fully understand the scope and implications of this indemnification clause, including what specific types of claims or liabilities are most likely to arise in their jurisdiction and how the "fullest extent permitted by law" limitation would apply in practice.