Does the indemnification obligation of a Bevaris Alliance franchisee extend to the Franchisor's customers?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
- 21.4 Liability under this indemnity is conditional on Franchisor discharging the following obligations. If any third party makes a claim, or notifies an intention to make a claim, against Franchisor which may reasonably be considered likely to give rise to a liability under this indemnity (Claim), Franchisor shall:
- (a) as soon as reasonably practicable, give written notice of the Claim to Franchisee, specifying the nature of the Claim in reasonable detail;
- (b) not make any admission of liability, agreement or compromise in relation to the Claim without the prior written consent of Franchisee (such consent not to be unreasonably conditioned, withheld or delayed), provided that Franchisor may settle the Claim (after giving prior written notice of the terms of settlement (to the extent legally possible) to Franchisee, but without obtaining Franchisee's consent) if Franchisor reasonably believes that failure to settle the Claim would be prejudicial to it in any material respect;
- (c) give Franchisee and its professional advisers access at reasonable times (on reasonable prior notice) to its premises and its officers, directors, employees, agents, representatives or advisers, and to any relevant assets, accounts, documents and records within the power or control of Franchisor, so as to enable Franchisee and its professional advisers to examine them and to take copies (at Franchisee's expense) for the purpose of assessing the Claim; and
- (d) subject to Franchisee providing security to Franchisor to Franchisor's reasonable satisfaction against any claim, liability, costs, expenses, damages or losses which may be incurred, take such action as Franchisee may reasonably request to avoid, dispute, compromise or defend the Claim.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
Based on the 2024 Bevaris Alliance Franchise Disclosure Document, the franchisee's indemnification obligations do not explicitly mention the Franchisor's customers. However, the FDD states that if a third party makes a claim against Bevaris Alliance that could lead to liability, Bevaris Alliance must notify the franchisee in writing, specifying the nature of the claim. The franchisee's liability under this indemnity is conditional on Bevaris Alliance fulfilling certain obligations, such as providing written notice of any claim and allowing the franchisee access to relevant information to assess the claim.
Furthermore, the franchisee is not allowed to make any admissions of liability or settlements related to the claim without the franchisee's prior written consent, although Bevaris Alliance can settle the claim without the franchisee's consent if it believes failure to do so would be prejudicial. The franchisee may also be required to take action to defend the claim, provided the franchisee provides security to Bevaris Alliance to cover potential costs and losses.
It is important for a prospective franchisee to seek clarification from Bevaris Alliance regarding the scope of this indemnification clause, specifically whether 'third party' includes customers of Bevaris Alliance. Understanding the extent of this obligation is crucial for assessing the potential financial risks associated with operating a Bevaris Alliance franchise.