What is the exception to Bhc Franchisor's obligation to indemnify the Master Franchisee?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Franchisor hereby agrees to protect, defend and indemnify Master Franchisee, its Principal Equity Operators, other owners, affiliates, officers, directors, employees and attorneys and each of them, from any Losses any of them may incur as a result of any third party Proceeding arising out of Franchisor's intentional misfeasance, gross negligence or material breach of Franchisor's obligations under this Agreement, except if caused by the intentional misfeasance of, gross negligence of, or material breach by, Master Franchisee (or any of its Principal Equity Operators, or other owners, affiliates, officers, directors, employees or attorneys of Master Franchisee) of any terms of, or Master Franchisee's obligations arising under, this Agreement.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc, as the Franchisor, generally agrees to protect, defend, and indemnify the Master Franchisee from losses resulting from third-party proceedings that arise due to Bhc's intentional misfeasance, gross negligence, or material breach of its obligations under the Master Franchise Agreement. This means Bhc will cover the Master Franchisee's losses in these specific situations.
However, there's an exception to this indemnification obligation. Bhc is not obligated to indemnify the Master Franchisee if the losses are caused by the intentional misfeasance, gross negligence, or material breach of the Master Franchisee (or its Principal Equity Operators, owners, affiliates, officers, directors, employees, or attorneys) of any terms or obligations arising under the Master Franchise Agreement. In other words, if the Master Franchisee's own actions or failures lead to the losses, Bhc is not responsible for covering those losses.
This exception is a standard risk allocation clause in franchise agreements. It ensures that each party is responsible for their own misconduct or breaches of contract. A prospective Bhc Master Franchisee should carefully review the terms of the Master Franchise Agreement to understand their obligations and the potential consequences of failing to meet them. Understanding this exception is crucial for assessing the potential liabilities and risks associated with operating a Bhc master franchise.