Under what circumstances must a Big Apple Bagels Developer indemnify the Franchisor?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) Developer and each of its owners must indemnify, defend and hold harmless Franchisor and its affiliates, and their respective officers, directors, employees and agents, from any and all claims, demands, liabilities, and all costs and expenses (including, without limitation, reasonable attorneys' fees) incurred in the defense of such claims, demands or liabilities, arising from the offer or sale of such securities, whether asserted by a purchaser of any such security or by a governmental agency. Franchisor shall have the right (but not the obligation) to defend any such claims, demands or liabilities and/or to participate in the defense of any action to which Franchisor or any of its affiliates or any of their respective officers, directors, employees or agents is named as a party.
Source: Item 23 — RECEIPTS (FDD pages 87–319)
What This Means (2025 FDD)
According to the 2025 Big Apple Bagels Franchise Disclosure Document, a Big Apple Bagels Developer is required to indemnify, defend, and hold harmless Big Apple Bagels and its affiliates, along with their respective officers, directors, employees, and agents under specific circumstances. This obligation arises from any claims, demands, liabilities, and associated costs and expenses, including reasonable attorneys' fees, that stem from the offer or sale of securities. This protection extends whether the claims are made by a purchaser of the securities or by a governmental agency.
Big Apple Bagels retains the right, but not the obligation, to defend any such claims, demands, or liabilities. Additionally, Big Apple Bagels has the option to participate in the defense of any action where Big Apple Bagels, its affiliates, or their respective officers, directors, employees, or agents are named as parties.
This means that if a Big Apple Bagels developer engages in activities related to the offer or sale of securities that lead to legal claims, the developer is responsible for covering the costs and liabilities incurred by Big Apple Bagels in defending against those claims. This indemnification clause is a standard risk-allocation measure in franchising, designed to protect the franchisor from liabilities arising from the franchisee's actions.