What exceptions exist to the Bhc franchisee's obligation to indemnify the Franchisor?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
med given the earlier of (i) the next business day after deposit with a reliable overnight courier, properly addressed and marked for delivery on the next business day, or (ii) when delivered in person by an agent of the sending party.
- (c) Any change in the addresses listed in section 16.1(a) above must be sent to the other party as soon as practicable after the change occurs by reliable overnight courier.
- (d) Any notices sent to Franchisee which include a statement of intent to terminate or not renew the Franchise must provide (i) the reasons why and (ii) the effective date of such termination or nonrenewal or expiration.
16.2 Indemnity.
- (a) Franchisee and its Principal Equity Operators, jointly and severally, hereby agree to protect, defend and indemnify Franchisor, and all of Franchisor's past, present and future owners, affiliates, officers, directors, employees, attorneys and designees, and each of them, and hold them harmless from and against any and all Losses arising out of or in connection with any "Proceeding" (as defined in section 16.2(f) below) concerning Franchisee's intentional tort or negligence, or the intentional tort or negligence of Franchisee's agents, servants or representatives, relating to Franchisee's development, maintenance or operation of the Franchised BHC Restaurant and the Franchised Business, except if caused by Franchisor's intentional misfeasance, gross negligence or material breach of any terms of, or Franchisor'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, a franchisee is generally obligated to protect, defend, and indemnify Bhc (the franchisor) against losses arising from proceedings related to the franchisee's intentional tort or negligence in developing, maintaining, or operating the franchised restaurant. However, this obligation does not apply if the losses are caused by Bhc's intentional misfeasance, gross negligence, or material breach of the franchise agreement. This means that if Bhc's own actions or failures lead to the losses, the franchisee is not required to indemnify Bhc. This protection extends to Bhc's owners, affiliates, officers, directors, employees, attorneys, and designees. The franchisee's principal equity operators are also jointly and severally responsible for this indemnification.
For a Master Franchisee, the same principle applies. The Master Franchisee must indemnify Bhc against losses arising from their intentional tort or negligence in developing, maintaining, or operating the BHC Restaurant, unless such losses are caused by Bhc's intentional misfeasance, gross negligence, or material breach of the franchise agreement. This ensures that Master Franchisees are responsible for their own actions but are not liable for Bhc's failures.
This indemnification clause is a standard provision in franchise agreements, designed to allocate risk between the franchisor and franchisee. The exception protects the franchisee from being held liable for issues caused by the franchisor's own misconduct or negligence. It is important for prospective franchisees to understand the scope of their indemnification obligations and the circumstances under which they are not responsible for covering the franchisor's losses.