Under the Belocal franchise agreement, are the Principals of the franchisee also required to indemnify the Franchisor?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Accordingly, Transferor, each Transferor Principal, Transferee, and each Transferee Principal hereby agree to, and will at all times, indemnify and hold each of the Franchisor Releasees harmless, to the fullest extent permitted by law, from all losses and expenses incurred in connection with any action, suit, proceeding, claim, demand, investigation, or inquiry (formal or informal), or any settlement thereof (whether or not a formal proceeding or action
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the franchise agreement stipulates that both the franchisee and the franchisee's principals are obligated to indemnify the franchisor under certain circumstances. This means that the principals can be held personally liable for certain losses, expenses, or damages incurred by Belocal.
Specifically, the franchisee and its principals must indemnify and hold Belocal harmless from losses and expenses connected to actions, suits, claims, or demands related to the transfer of the franchise agreement or the franchisee's business. This obligation extends to covering losses and expenses resulting from various situations, including harm or injury to the public, property damage, negligence, misconduct, data breaches, intellectual property infringement, labor disputes, and claims arising from the operation of the franchised business.
This requirement for principals to indemnify the franchisor is a significant point for prospective Belocal franchisees. It means that the individuals who are considered principals of the franchise (e.g., owners, partners, or key managers) are taking on personal financial risk related to the operation of the franchise. Franchisees should carefully consider the implications of this indemnity clause and seek legal counsel to fully understand their obligations and potential liabilities.