Does the Belocal franchisee's indemnification obligation extend to actions brought by the Franchisor's affiliates?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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B. Indemnification.
(1) Franchisee and the Principals ("Franchisee Indemnifying Parties") agree to fully protect, indemnify, defend, reimburse, and hold harmless Franchisor; Franchisor's predecessors and affiliates; and their respective shareholders, members, partners, officers, directors, managers, employees, agents, representatives, attorneys, accountants, guarantors, successors, and assigns, in both their corporate and individual capacities, past or present (collectively, "Indemnitees"), to the fullest extent permitted by law, from any and all Losses and Expenses (defined below) incurred in connection with any action, suit, proceeding, claim, demand, judgment, investigation, or inquiry (formal or informal), or any settlement thereof (whether or not a formal proceeding or action has been instituted) (collectively, "Action"), arising from any of the following: (1) any actual or alleged violation of any law, rule, regulation, or ordinance by
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;
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the franchisee's indemnification obligations do extend to the franchisor's affiliates. Specifically, the franchisee must protect, indemnify, defend, reimburse, and hold harmless Belocal, its predecessors and affiliates, and their respective shareholders, members, partners, officers, directors, managers, employees, agents, representatives, attorneys, accountants, guarantors, successors, and assigns. This obligation applies to any losses and expenses incurred in connection with any action, suit, proceeding, claim, demand, judgment, investigation, or inquiry arising from various situations.
This means that a Belocal franchisee could be responsible for covering the legal costs and damages incurred by Belocal's affiliates in certain situations. These situations include any actual or alleged violation of any law, rule, regulation, or ordinance by the franchisee. The franchisee is also responsible for notifying Belocal of any action within 48 hours by telephone and within four days in writing.
Belocal and its affiliates have the right to retain counsel of their choosing to represent them with respect to any claim, and control the response and defense, including settlements or other actions they deem appropriate, all at the franchisee's expense. The franchisee must reimburse Belocal for all costs, expenses, and attorneys' fees immediately upon request. The franchisee cannot settle or compromise any claim without written consent from Belocal if it does not include a written release from liability or if it adversely affects Belocal. This broad indemnification clause places a significant financial burden on the franchisee, as they could be liable for a wide range of potential issues involving Belocal and its affiliates.