Are punitive damages included in the Losses and Expenses that Belocal franchisees must indemnify?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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"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 foregoin
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, franchisees must indemnify Belocal for "Losses and Expenses," which specifically includes punitive damages. This means that if a claim, suit, or proceeding arises related to the franchisee's business, and Belocal incurs costs as a result, the franchisee is responsible for covering those costs, including any punitive damages awarded. This obligation extends to various scenarios, such as damage to property, injury to persons, negligence, data breaches, intellectual property infringement, and failure to warn about products or services.
The indemnity obligation is broad, requiring franchisees to hold Belocal harmless from losses and expenses incurred in connection with any action, suit, proceeding, claim, demand, investigation, or inquiry. This includes not only direct damages but also indirect costs like attorneys' fees, investigative fees, court costs, settlement amounts, and compensation for damage to Belocal's reputation and goodwill. The franchisee's responsibility to indemnify Belocal applies regardless of any fault or negligence on the part of Belocal itself, and franchisees waive any claims against Belocal arising from these situations.
This requirement has significant financial implications for prospective Belocal franchisees. They must be prepared to cover potentially substantial costs if a claim arises related to their business operations. Franchisees should ensure they have adequate insurance coverage and understand the full scope of their indemnification obligations. It is also important to note that while franchisees are responsible for indemnifying Belocal, the arbitrator has no power to award punitive damages with respect to any claim for damages and is authorized to award only actual damages sustained by a party.