Does the Bft Developer's indemnification obligation survive the termination or expiration of the Development Agreement?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
B. Indemnification. Developer agrees to indemnify, defend and hold Franchisor, its owners, affiliates, successors and assigns, and the directors, officers, owners, managers, employees, servants, agents of each (collectively, the "Indemnitees"), harmless from and against any and all losses, damage, claims, demands, liabilities and causes of actions of every kind or character and nature, as well as costs and expenses incident thereto (including reasonable attorneys' fees and court costs), that are brought against any of the Indemnitees that arise out of or are otherwise related to Developer's or an Indemnitee's (a) breach or attempted breach of, or misrepresentation under, this Agreement or in connection with the exercise of the Development Rights in any manner other than as authorized herein; (b) ownership, construction, development, management, or operation of any Studios that Developer or its affiliates own, including, without limitation, Developer's or an Indemnitee's employment practices; (c) gross negligence or intentional misconduct; and/or (d) alleging Developer's or its representatives' violation of Applicable Laws as set forth in Section 13.D below. Notwithstanding the foregoing, any Indemnitee may choose to engage counsel and defend against any such claim and may require immediate reimbursement from the Developer of all expenses and fees incurred in connection with such defense. This indemnity will continue in full force and effect subsequent to and notwithstanding this Agreement's expiration or termination. Indemnitees need not seek recovery from any insurer or other third party, or otherwise mitigate its losses and expenses, in order to maintain and recover fully a claim against Developer under this Section. Any Indemnitee's failure to pursue a recovery or mitigate a loss will not reduce or alter the amounts that person may recover from Developer under this Section.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the Developer's indemnification obligations do indeed survive the termination or expiration of the Development Agreement. Specifically, the agreement states that the indemnity provided by the Developer to Bft will remain in full effect even after the agreement has expired or been terminated.
This means that even after the Development Agreement ends, whether through its natural expiration or earlier termination, the Developer remains responsible for covering Bft's losses, damages, claims, and liabilities that arise from specific situations. These situations include any breach or attempted breach of the agreement by the Developer, issues related to the ownership, construction, development, management, or operation of the studios, gross negligence or intentional misconduct by the Developer, and allegations of the Developer's violation of applicable laws.
This provision protects Bft from potential liabilities even after the formal business relationship with the Developer has ended. For a prospective Bft developer, this signifies a long-term responsibility to ensure compliance and proper conduct throughout the development and operation of the studios. It also highlights the importance of maintaining adequate insurance coverage and risk management practices to mitigate potential future claims. The franchisee should consult with a legal expert to fully understand the scope and implications of this indemnification clause.