Under what circumstances does a Bhc franchisee indemnify the franchisor against judgments?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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 must indemnify the franchisor under specific circumstances related to the operation of the franchised business. The franchisee and its Principal Equity Operators jointly and severally agree to protect, defend, and indemnify Bhc, including its owners, affiliates, officers, directors, employees, attorneys, and designees. This indemnification applies to any losses arising from any Proceeding concerning the franchisee's intentional tort or negligence, or the intentional tort or negligence of the franchisee's agents, servants, or representatives. This relates to the franchisee's development, maintenance, or operation of the Franchised BHC Restaurant and the Franchised Business.
However, this obligation does not apply if the losses are caused by Bhc's intentional misfeasance, gross negligence, or material breach of any terms or obligations under the Franchise Agreement. This means that if Bhc itself is responsible for the issue through its own actions or failures, the franchisee is not required to indemnify them.
In practical terms, this clause means a Bhc franchisee could be responsible for covering the franchisor's legal costs and damages if the franchisee's actions or the actions of their employees lead to a lawsuit or other legal proceeding. It is important for a prospective franchisee to understand the scope of this indemnity and to ensure they have adequate insurance coverage to protect themselves against potential claims. Franchisees should also ensure they operate their business in a way that minimizes the risk of negligence or intentional torts.