Does the Belocal franchisee have to indemnify for data breaches related to the Franchisor's business?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
any Franchisee Indemnifying Party, any Independent Staff, or the Franchised Business; (2) any damage to property caused by any Franchisee Indemnifying Party, any Independent Staff, or the Franchised Business; (3) injury to or death or disability of any person caused by any Franchisee Indemnifying Party, any Independent Staff, or the Franchised Business; (4) any negligence, recklessness, misconduct, or criminal conduct by any Franchisee Indemnifying Party, the operations managers, or any Independent Staff; (5) data breaches related to the Franchised Business or the business of Franchisor or any of its affiliates; (6) any breach of this Agreement or any representations and warranties herein by any Franchisee Indemnifying Party; (7) infringement of any intellectual property rights by any Franchisee Indemnifying Party or any Independent Staff, or otherwise related to the operation of the Franchised Business; (8) any failure by any Franchisee Indemnifying Party, any Independent Staff, or the Franchised Business to warn or give instructions related to any products or services provided by Indemnitees or by Franchisee; (9) any labor or employment law disputes relating to the Franchised Business or claims arising out of Franchisee's employment practices, including claims that any of the Indemnities are the employer, joint employer, or co-employer of Franchisee, any Principal, or Franchisee's agents, employees, or contractors; (10) any thirdparty claim that arises from or that explicitly or implicitly is premised on Franchisor's direct and vicarious liability or that arises from Franchisee's employment and personnel decisions, including wrongful termination, wage and hour violations, and employee harassment and discrimination claims; (11) any acts, errors, or omissions of the Franchised Business, any Franchisee Indemnifying Party, and/or any Independent Staff; (12) the content of, advertisements in, and distribution of the Publication; (13) losses, claims, or damages incurred by persons, other than Franchisee, due to errors or omissions contained in financial statements prepared by any Franchisee Indemnifying Party pursuant to this Agreement, even if cause by the negligence of any Franchisee Indemnifying Party or others for whom Franchisee is responsible under the law; or (14) any third-party claim that arises from or is connected with the ownership, establishment, operation, or closure of the Franchised Business and/or the Publication.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, franchisees are required to indemnify Belocal for losses, expenses, and damages arising from data breaches related to either the franchised business or Belocal's own business. This means that if a data breach occurs that is connected to the franchisee's operations or even Belocal's broader network, the franchisee may be responsible for covering the associated costs. These costs can include legal fees, settlements, and other related expenses.
The franchisee's indemnification extends to various claims and causes of action where Belocal is named as a defendant. This includes situations arising directly or indirectly from the operation of the franchise, security breaches, or the franchisee's violation of privacy laws, data protection policies, consumer protection laws, and the PCI-DSS (Payment Card Industry Data Security Standard). The franchisee must also hold harmless and defend Belocal against such claims.
This requirement places a significant responsibility on Belocal franchisees to ensure robust data protection and security measures are in place. Failure to comply with data protection policies and privacy laws could result in substantial financial liabilities for the franchisee. Prospective franchisees should carefully evaluate the potential risks associated with data security and the costs of implementing and maintaining adequate protective measures. They should also seek legal counsel to fully understand the scope of their indemnification obligations under the franchise agreement.