Under what circumstances does Bhc franchisor indemnify the franchisee?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the franchisee is responsible for protecting, defending, and indemnifying Bhc and its affiliates against any losses connected to legal proceedings arising from the franchisee's intentional tort or negligence, or that of their agents, in developing, maintaining, or operating the franchised Bhc restaurant. This obligation extends to the franchisee's Principal Equity Operators, who are jointly and severally liable.
However, Bhc does not require the franchisee to indemnify them if the losses are caused by Bhc's intentional misfeasance, gross negligence, or material breach of the franchise agreement. This means that if Bhc's own actions or failures lead to the franchisee's losses, the franchisee is not responsible for covering Bhc's losses.
This arrangement is typical in franchising, where franchisees usually bear responsibility for their own operational conduct, while the franchisor remains accountable for their own actions. Prospective franchisees should carefully consider this allocation of responsibility and ensure they have adequate insurance and risk management strategies in place to cover potential liabilities arising from their business operations.