Are attorney's fees included in the Losses and Expenses that Belocal franchisees must indemnify?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
"Losses and Expenses" includes, without limitation, all losses, compensatory, exemplary, or punitive damages, fines, charges, costs, expenses, lost profits, obligations, liabilities, penalties, reasonable attorneys' fees, court costs, settlement amounts, judgments, compensation for damages to Franchisor's reputation and goodwill, and other such amounts incurred in connection with the matters described in Section 12.B.(1) above. This indemnity shall survive the expiration or termination of this Agreement. Each Franchisee Indemnifying Party agrees that this obligation to indemnify applies regardless of the cause or any concurrent or contributing fault or negligence of the Indemnitees. Each Franchisee Indemnifying Party hereby waives all claims against Indemnitees arising from any of the foregoing.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, franchisees must indemnify the franchisor for losses and expenses, which include attorney's fees. Specifically, the definition of "Losses and Expenses" includes "reasonable attorneys' fees." This means that if a franchisee's actions lead to a claim, suit, or proceeding against Belocal, the franchisee is responsible for covering Belocal's legal costs, including attorney's fees, as part of the indemnification.
This obligation extends to various scenarios outlined in the FDD, such as those related to security breaches, transfers of the franchise, and the franchisor's exercise of step-in rights. The franchisee's responsibility to cover these costs applies regardless of whether Belocal is at fault or negligent. This could create a significant financial burden for franchisees, as legal costs can be substantial, especially in complex or prolonged disputes.
Furthermore, the franchisee's indemnification obligation survives the expiration or termination of the Franchise Agreement. This means that even after the franchise relationship ends, the franchisee may still be liable for attorney's fees and other expenses related to incidents that occurred during the term of the agreement. Franchisees should be aware of this long-term liability and carefully consider the potential financial risks associated with it.
It is important for prospective Belocal franchisees to fully understand the scope of their indemnification obligations and to seek legal counsel to assess the potential risks and liabilities. Franchisees should also ensure they have adequate insurance coverage to protect themselves against potential claims and legal expenses. Understanding these obligations is crucial for making an informed decision about investing in a Belocal franchise.