Under what circumstances are Bhc franchisees and their Principal Equity Operators required to indemnify Bhc Franchisor?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
(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.
(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
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the franchisee and their Principal Equity Operators are required to indemnify the franchisor under specific circumstances detailed in the agreement. The franchisee is responsible for protecting, defending, and indemnifying Bhc, including its owners, affiliates, officers, directors, employees, and attorneys, from any losses resulting from a third-party proceeding. This obligation arises from the franchisee's intentional misfeasance, gross negligence, or material breach of the franchise agreement.
For indemnification to be effective, the indemnified party must provide reasonable notice of any claim or loss to the indemnifying party. The indemnifying party then assumes the defense of the proceeding, bearing all costs and expenses, through legal counsel reasonably acceptable to the indemnified party. The indemnified party has the option to select separate counsel at their own expense.
The indemnifying party retains control over the proceeding, including the right to settle. However, they cannot enter into any judgment or settlement without the written consent of the indemnified party if it involves an admission of liability, affects the rights of the indemnified party, or fails to release the indemnified party from all proceedings and losses. The indemnified party will not be liable for any losses compromised or settled in violation of these terms.