How is the indemnification provided in section 16.2 of the Bhc franchise agreement intended to be interpreted and enforced?

According to Bhc's 2025 Franchise Disclosure Document, section 16.2 outlines the indemnification responsibilities of both the franchisee/master franchisee and Bhc. The indemnification clauses are intended to protect each party from losses arising from legal proceedings related to their respective actions or negligence. Specifically, the parties acknowledge that they intend the indemnification provided in section 16.2 to be interpreted and enforced in a manner providing the fullest extent of indemnification to the Indemnified Party now or hereafter permitted by law. This means that the parties intend for the indemnification to be as broad as legally possible, offering maximum protection to the party being indemnified.

For a franchisee or master franchisee, this means they agree to defend and hold Bhc harmless from losses connected to legal proceedings stemming from their intentional tort, negligence, or the actions of their representatives in developing, maintaining, or operating the franchised restaurant. This obligation does not apply if the losses are caused by Bhc's intentional misconduct, gross negligence, or a significant breach of the franchise agreement. Conversely, Bhc agrees to indemnify the master franchisee from losses resulting from third-party legal proceedings that arise from Bhc's intentional misconduct, gross negligence, or material breach of the agreement, unless the losses are caused by the master franchisee's own misconduct or breach.

To ensure the indemnification is effective, the party seeking indemnification (the Indemnified Party) must provide reasonable notice to the party providing the indemnification (the Indemnifying Party) of any claim or loss. Failure to provide timely notice may reduce the Indemnifying Party's obligations if it is materially prejudiced by the delay. The Indemnifying Party has the right to assume the defense of the legal proceeding with counsel reasonably acceptable to the Indemnified Party, although the Indemnified Party can choose to be represented by separate counsel at their own expense. The Indemnifying Party controls the proceeding, including settlement, but cannot enter into any settlement that admits liability on the part of the Indemnified Party, adversely affects their rights, or does not fully release them from all proceedings and losses without the Indemnified Party's written consent. The indemnification is a continuing right that survives the termination or expiration of the franchise agreement.