What is the definition of 'Losses' that the Master Franchisee agrees to indemnify Bhc from, as referenced in section 16.2(d)?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
and that Master Franchisee will use these only for the uses and in the manner franchised and licensed hereunder and as herein provided. Furthermore, Master Franchisee and Master Franchisee's employees and agents will not engage in any act or conduct that impairs the goodwill associated with the Marks.
- (d) Master Franchisee agrees to indemnify and hold harmless Franchisor from all "Losses" (as defined in section 16.2(d) below), which Franchisor may sustain as a result of any unauthorized use or disclosure of Proprietary Information or Marks by Master Franchisee or its employees and agents. Master Franchisee further agrees and acknowledges that the disclosure or use of Proprietary Information or Marks in a manner not authorized by this Agreement will cause immediate and irreparable damage to Franchisor that would be impossible or inadequate to measure and calculate and could not be fully remedied by monetary damages. Accordingly, Franchisor has the right to specifically enforce this Agreement and seek injunctive or other equitable relief as may be necessary or appropriate to prevent such unauthorized disclosures or use without the necessity of proving actual damages by reason of any such breach or threatened breach of this Agreement. Master Franchisee further agrees that no bond or other form of security is required to obtain such equitable relief and Master Franchisee hereby consents to
the issuance of such injunction and to the ordering of specific performance. Master Franchisee further agrees and acknowledges that such remedies are in addition to any other rights or remedies, whether at law or in equity, which may be available to Franchisor, including monetary damages.
(e) 18 USC Section 1833(b) states: "An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal." Accordingly, Franchisor and Master Franchisee will each have the right to disclose in confidence Trade Secrets to Federal, State, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. Franchisor and Master Franchisee also have the right to disclose Trade Secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure. Nothing in this Agreement is intended to conflict with 18 U.S.C. Section 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. Section 1833(b).
9.4 Modification of Marks and Trade Dress.
Franchisor may add to, substitute, or modify any or all of the Marks or Trade Dress from time to time, by directive in the Operations Manual or otherwise in writing by Franchisor.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, section 16.2(d) specifies that the Master Franchisee must indemnify Bhc from all 'Losses' resulting from any unauthorized use or disclosure of Proprietary Information or Marks by the Master Franchisee, its employees, and agents.
The term "Losses" is defined as all 'Expenses' (as defined in section 16.2(e)), liabilities, obligations, losses, fines, penalties, costs, or damages including all reasonable out of pocket fees and disbursements of legal counsel in the investigation or defense of any of the same or in asserting any party's respective rights but excluding punitive damages (unless resulting from third party claims). The term "Expenses" includes all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding casts, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding. Expenses will also include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on the person being indemnified as a result of the actual or deemed receipt of any payments under this Agreements, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent.
This means that if the Master Franchisee or their staff misuses Bhc's proprietary information or trademarks, leading to financial or legal repercussions for Bhc, the Master Franchisee is responsible for covering all associated costs. This includes not only direct losses and damages but also legal fees and other expenses incurred during the investigation or defense of any claims. However, the Master Franchisee is typically not responsible for punitive damages unless those damages arise from third-party claims.
This indemnification clause highlights the importance of protecting Bhc's proprietary information and trademarks. It also means the Master Franchisee should implement strict protocols to prevent unauthorized use or disclosure. The Master Franchisee should ensure their employees are well-trained and understand the importance of safeguarding sensitive information and adhering to brand guidelines to avoid potential liabilities.