Does Beef O Bradys' maintenance of insurance on behalf of a franchisee reduce or absolve the franchisee of any indemnification obligations?
Beef_O_Bradys Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of this indemnification, "claims" includes all obligations, damages (actual, consequential or otherwise) and costs reasonably incurred in the defense of any claim against any of the Indemnified Parties, including, without limitation, reasonable accountants', arbitrators', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other expenses of litigation, arbitration or alternative dispute resolution and travel and living expenses. We have the right to defend any such claim against us. This indemnity will continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.
Under no circumstances will we or any other Indemnified Party be required to seek recovery from any insurer or other third party, or otherwise to mitigate our, their or your losses and expenses, in order to maintain and recover fully a claim against you. You agree that a failure to pursue such recovery or mitigate a loss will in no way reduce or alter the amounts we or another Indemnified Party may recover from you.
Source: Item 23 — RECEIPTS. (FDD pages 66–330)
What This Means (2025 FDD)
The 2025 Beef O Bradys Franchise Disclosure Document does not specify whether the brand's maintenance of insurance on behalf of a franchisee reduces or absolves the franchisee of their indemnification obligations. However, the FDD does address the franchisee's responsibility to indemnify Beef O Bradys.
According to the FDD, franchisees agree to indemnify, defend, and hold harmless Beef O Bradys, its affiliates, shareholders, directors, officers, employees, agents, successors, and assigns from all claims, obligations, and damages. The definition of "claims" includes all obligations, damages, and costs reasonably incurred in the defense of any claim, including legal fees and expenses.
Furthermore, the FDD states that Beef O Bradys or any other indemnified party is not required to seek recovery from any insurer or third party to maintain a claim against the franchisee. The franchisee's obligation to indemnify Beef O Bradys remains in effect even after the termination or expiration of the Franchise Agreement. This means that even if Beef O Bradys maintains insurance, it does not reduce or alter the amounts they may recover from the franchisee under the indemnification clause.
Because the FDD does not explicitly address whether Beef O Bradys' insurance maintenance impacts a franchisee's indemnification duties, prospective franchisees should seek clarification from the franchisor regarding the interplay between insurance coverage and indemnification obligations. It would be prudent to understand the extent to which any insurance maintained by Beef O Bradys would cover potential claims and whether such coverage would affect the franchisee's responsibility to indemnify the franchisor.