If an Indemnitee chooses to defend against a claim, is the Bft franchisee required to immediately reimburse all expenses and fees incurred?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees to indemnify, defend and hold Franchisor, its owners, affiliates, successors and assigns, and the directors, officers, owners, managers, employees, servants and 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 Franchisee's or an Indemnitee's (a) breach or attempted breach of, or misrepresentation under, this Agreement or in connection with the offer/sale of the Studio prior to the execution of this Agreement; (b) ownership, construction, development, management, or operation of the Studio in any manner, including, without limitation, Franchisee's or an Indemnitee's employment practices; (c) gross negligence or intentional misconduct; and/or (d) alleging Franchisee's or its representatives' violation of Applicable Laws as set forth in Section 8.5 above. Notwithstanding the foregoing, any Indemnitee may choose to engage counsel and defend against any such claim and may require immediate reimbursement from the Franchisee 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 Franchisee 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 Franchisee under this Section.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, a franchisee may be required to provide immediate reimbursement of expenses and fees if an Indemnitee chooses to defend against a claim. Specifically, the franchisee agrees to indemnify, defend, and hold harmless Bft and its related parties (the Indemnitees) from any losses, damages, claims, liabilities, and causes of action, including attorney's fees and court costs.
This indemnification extends to issues arising from the franchisee's breach of the Franchise Agreement, the operation of the Bft studio, gross negligence, intentional misconduct, or violations of applicable laws. An Indemnitee has the option to engage counsel and defend against any claim, and in such cases, may demand immediate reimbursement from the franchisee for all associated expenses and fees.
This clause means that a Bft franchisee could face significant and immediate financial burdens if a claim arises and Bft chooses to defend itself. The franchisee is responsible for covering these costs, regardless of whether Bft seeks recovery from insurers or other third parties, or attempts to mitigate losses. This obligation remains in effect even after the Franchise Agreement expires or terminates, potentially creating long-term financial exposure for the franchisee.