Under what circumstances is a Bhc franchisee required to indemnify the franchisor?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
30 days prior written notice to you and us.
- (9) You must indemnify and hold harmless us and our affiliates, and each of our and their respective directors, officers, employees, shareholders, agents, successors and assigns from any liability or damage any of them may incur, including reasonable attorney fees, as a result of claims, demands, costs, or judgments of any kind or nature, by anyone whomsoever, for bodily injury or property damage arising out of or otherwise connected with your or your Subfranchisee(s)' negligent performance or actions with respect to the MFA, any Subfranchise Agreements, Trademarks, IP Rights, Confidential Information, maintenance or operation of Master Franchised BHC Restaurants, or any act of omission or commission by you, Franchisee or your Subfranchisee(s), officers, directors, shareholders or agents, except in cases of gross negligence or willful misconduct by us*.*
- (10) Liquidated damages are calculated as follows: (a) your average royalty fees, advertising fees, and technology fees payable each month over the 12-month period immediately preceding the date of termination (or, if the Master Franchised BHC Restaurant has been open less than 12 months, the average monthly royalty fees and advertising fees payable for the period the Master Franchised BHC Restaurant was open); (b) multiplied by the lesser of (i) 36 months, or (ii) the number of months then remaining in the then-current term of the Franchise Agreement. If no Master Franchised BHC Restaurant has been opened at the time of termination, Franchisor's lost future revenues as a result of Master Franchisee's breach shall be an amount equal to the average monthly royalty fees, advertising fees, and additional fees
payable by other similar franchisees within twenty-five (25) miles of any of Master Franchisee's proposed locations multiplied by the lesser of thirty-six (36) months or the number of months then remaining in the then-current term of this Agreement.
Item 7: Estimated Initial Investment:
The first table in this Item 7 describes your estimated initial investment to commence operation of your Master Franchise Business in the Development Area. In addition, (i) given that you must establish and operate through an affiliate at least one (1) Affiliate Franchised BHC Restaurant within the Development Area pursuant to separate Franchise Agreement before you may grant subfranchises to third parties, and (ii) a second table in this Item 7 that describes your affiliate's estimated initial investment to establish and begin operation of the first Affiliate Franchised BHC Restaurant within the Development Area.
Source: Item 6 — Other Fees (FDD pages 12–18)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee must indemnify and hold harmless Bhc, its affiliates, and their respective directors, officers, employees, shareholders, agents, successors, and assigns from any liability or damage they may incur. This includes reasonable attorney fees resulting from claims, demands, costs, or judgments of any kind. These liabilities arise from bodily injury or property damage connected with the franchisee's or their subfranchisee(s)' negligent performance or actions related to the Master Franchise Agreement (MFA), Subfranchise Agreements, Trademarks, IP Rights, Confidential Information, or the maintenance or operation of Master Franchised Bhc Restaurants. This also covers any act of omission or commission by the franchisee, their subfranchisee(s), officers, directors, shareholders, or agents.
In simpler terms, if someone gets hurt or their property is damaged due to the franchisee's negligence or actions (or those of their subfranchisees or employees) while running the Bhc restaurant, the franchisee is responsible for covering Bhc's costs and legal fees related to any claims or lawsuits. This is a standard clause in franchise agreements, designed to protect the franchisor from liabilities arising from the franchisee's operations.
However, there is an exception: Bhc franchisees are not required to indemnify Bhc in cases of gross negligence or willful misconduct on the part of Bhc itself. This means that if the issue arises due to Bhc's own serious negligence or intentional wrongdoing, the franchisee is not responsible for covering Bhc's related costs. The FDD also includes a table outlining an 'Indemnification' fee, which will vary under the circumstances and is due as incurred, noting that it reimburses losses Bhc suffers from the operation of the franchisee's business.