Under the Bft franchise agreement, can an Indemnitee choose their own counsel to defend against a claim?
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, the franchise agreement outlines indemnification responsibilities for the franchisee. Specifically, the agreement states that the franchisee must indemnify, defend, and hold harmless Bft, its owners, affiliates, successors, assigns, directors, officers, owners, managers, employees, servants, and agents (collectively referred to as "Indemnitees") against any losses, damages, claims, demands, liabilities, and causes of action. This includes covering costs and expenses such as reasonable attorneys' fees and court costs.
Notably, the Bft franchise agreement explicitly allows any Indemnitee to choose their own legal counsel to defend against any claim. Furthermore, the Indemnitee has the right to demand immediate reimbursement from the franchisee for all expenses and fees incurred during the defense. This obligation remains in effect even after the franchise agreement expires or terminates.
This clause places a significant financial burden on the franchisee, as they could be responsible for covering potentially substantial legal fees incurred by Bft or any of its related parties in the event of a claim. It is also important to note that Indemnitees are not required to seek recovery from any insurer or mitigate their losses before seeking full recovery from the franchisee. This could lead to higher costs for the franchisee compared to situations where mitigation is required.