What costs are included in the indemnification obligation of a Big Apple Bagels Developer to the Franchisor?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
Developer agrees to indemnify Franchisor and its subsidiaries, affiliates, stockholders, directors, officers, employees, agents and assignees against and to reimburse them for all such obligations, damages, and taxes for which they are held liable and for all costs reasonably incurred by them in the defense of any such claim brought against them or in any action in which they are named as a party, including without limitation reasonable attorneys' and expert witness fees, cost of investigation and proof of facts, court costs, other litigation expenses, and travel and living expenses. Franchisor shall have the right to defend any such claim against it. The indemnities and assumptions of liabilities and obligations herein shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 87–319)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, the developer is obligated to indemnify Big Apple Bagels and its related parties. This means the developer must protect them from certain liabilities and cover specific costs.
Specifically, the developer must reimburse Big Apple Bagels for all obligations, damages, and taxes for which Big Apple Bagels is held liable due to the developer's business operations. This includes various types of taxes such as sales, use, excise, income, gross receipts, and property taxes. The indemnification extends to costs reasonably incurred by Big Apple Bagels in defending against any claims or actions in which they are named as a party.
These costs include, but are not limited to, reasonable attorneys' and expert witness fees, the cost of investigating and proving facts, court costs, other litigation expenses, and travel and living expenses. This obligation to indemnify and assume liabilities remains in effect even after the termination or expiration of the Development Agreement.
In practical terms, this means a Big Apple Bagels developer could face significant financial responsibility if their business operations lead to legal claims or tax liabilities for Big Apple Bagels. It is important for prospective developers to understand the scope of this indemnification and to ensure they have adequate insurance and legal counsel to manage these potential risks.