Under what circumstances must a Bhc franchisee indemnify and hold harmless 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.
- (b) Franchisor hereby agrees to protect, defend and indemnify 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, Franchisee (or any of its Principal Equity Operators, or other owners, affiliates, officers, directors, employees or attorneys of Franchisee) of any terms of, or 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, a franchisee must indemnify and hold harmless Bhc under specific circumstances related to their operation of the franchised business. Specifically, the franchisee is responsible for protecting, defending, and indemnifying Bhc from losses connected to any legal proceeding concerning the franchisee's intentional tort or negligence. This responsibility extends to the actions of the franchisee's agents, servants, or representatives in the development, maintenance, or operation of the Bhc 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 is directly responsible for the issue, the franchisee is not required to indemnify them.
Additionally, the franchisee must indemnify and hold harmless Bhc from all losses that Bhc may sustain as a result of any unauthorized use or disclosure of proprietary information or marks by the franchisee or its employees and agents. This clause underscores the importance of protecting Bhc's trademarks and confidential information. Unauthorized use or disclosure can lead to immediate and irreparable damage to Bhc, justifying their right to seek injunctive or other equitable relief without needing to prove actual damages. The franchisee also consents to the issuance of such injunction and to the ordering of specific performance, and agrees that no bond or other form of security is required to obtain such equitable relief.
These indemnity clauses are standard in franchise agreements to protect the franchisor from liabilities arising from the franchisee's actions. A prospective Bhc franchisee should carefully review these clauses with legal counsel to fully understand the scope of their indemnification obligations and the potential financial risks involved. Understanding these obligations is crucial for managing risk and ensuring compliance with the franchise agreement.