Does the Bhc Master Franchisee's indemnification responsibility pertain to obligations under section 16.12?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
16.2 Indemnity.
(a) Master 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 Master Franchisee's intentional tort or negligence, or the intentional tort or negligence of Master Franchisee's agents, servants or representatives, relating to Master Franchisee's development, maintenance or operation of the 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.
(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.
(c) For the indemnification to be effective, each indemnified party ("Indemnified Party") will give the indemnifying party ("Indemnifying Party") reasonable notice of each claim or loss for which the Indemnified Party demands indemnity and defense, except that failure to provide such notice will not release the Indemnifying Party from any obligations hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure.
The Indemnifying Party will assume, at its sole cost and expense, the defense of such Proceeding through legal counsel reasonably acceptable to the Indemnified Party, except that the Indemnified Party may at its option and expense select and be represented by separate counsel.
The Indemnifying Party will have control over the Proceeding, including the right to settle; provided, however, the Indemnifying Party will not, absent the written consent of the Indemnified Party, consent to the entry of any judgment or enter into any settlement that: (i) provides for any admission of liability on the part of the Indemnified Party or relief other than the payment of monetary damages for which the Indemnifying Party will be solely liable; or (ii) adversely affects the rights of the Indemnified Party under this Agreement, or (iii) does not release the Indemnified Party from all Proceedings and "Losses" (as defined in section 16.2(d) below) in respect thereof.
In no event will the Indemnified Party be liable for any Losses that are compromised or settled in violation of this section 16.2.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, section 16.2 outlines the indemnification responsibilities of both the franchisor and the master franchisee. Specifically, section 16.2(a) states that the Master Franchisee agrees to protect, defend, and indemnify the Franchisor from losses connected to any proceeding concerning the Master Franchisee's intentional tort or negligence related to the development, maintenance, or operation of the Bhc Restaurant and the Franchised Business. This indemnification does not apply if the losses are caused by the Franchisor's intentional misfeasance, gross negligence, or material breach of the agreement.
Section 16.2(b) details the Franchisor's agreement to protect, defend, and indemnify the Master Franchisee from losses resulting from third-party proceedings arising out of the Franchisor's intentional misfeasance, gross negligence, or material breach of its obligations under the agreement. However, this indemnification is not effective if the losses are caused by the Master Franchisee's intentional misfeasance, gross negligence, or material breach of the agreement.
Section 16.2(c) specifies that for the indemnification to be effective, the Indemnified Party must provide reasonable notice of each claim or loss to the Indemnifying Party. Failure to provide such notice will only release the Indemnifying Party from its obligations to the extent that the Indemnifying Party is materially prejudiced by such failure. The Indemnifying Party will assume the defense of the proceeding at its sole cost and expense, using legal counsel reasonably acceptable to the Indemnified Party. The Indemnifying Party has control over the proceeding, including the right to settle, but cannot enter into any judgment or settlement that admits liability on the part of the Indemnified Party, adversely affects the rights of the Indemnified Party, or does not release the Indemnified Party from all proceedings and losses, without the written consent of the Indemnified Party. The Indemnified Party will not be liable for any losses compromised or settled in violation of section 16.2.