What losses are Bft franchisees required to indemnify the Indemnitees against?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
11.2 Indemnification. 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, franchisees must indemnify the Indemnitees (which include Bft, its owners, affiliates, successors, assigns, and their respective directors, officers, owners, managers, employees, servants, and agents) against a wide array of potential losses. This indemnification extends to any losses, damages, claims, demands, liabilities, and causes of action, along with associated costs and expenses such as reasonable attorneys' fees and court costs.
Specifically, Bft franchisees are responsible for protecting the Indemnitees from claims arising out of the franchisee's breach (or attempted breach) of the franchise agreement, any misrepresentations made during the franchise sale, or issues related to the studio's ownership, construction, development, management, or operation. This includes liabilities stemming from the franchisee's employment practices. Franchisees are also liable for losses resulting from their gross negligence or intentional misconduct, as well as any claims alleging violations of applicable laws by the franchisee or their representatives.
This indemnification clause is quite broad, placing significant financial responsibility on the Bft franchisee. The clause remains in effect even after the franchise agreement expires or terminates. Moreover, the Indemnitees are not obligated to seek recovery from insurance or other third parties before pursuing a claim against the franchisee, nor are they required to mitigate their losses. The failure to pursue recovery or mitigate a loss does not reduce the amount recoverable from the franchisee.
For a prospective Bft franchisee, this means understanding and potentially budgeting for significant legal and financial exposure. It is crucial to operate the studio in full compliance with the franchise agreement and all applicable laws, maintain sound employment practices, and avoid any actions that could be construed as gross negligence or intentional misconduct. Franchisees should also consider obtaining adequate insurance coverage to protect against potential claims and consult with legal counsel to fully understand their obligations under the indemnification clause.