Under what circumstances must a Big Apple Bagels franchisee pay indemnification fees to Big Apple Bagels?

According to Big Apple Bagels's 2025 Franchise Disclosure Document, franchisees may be required to pay indemnification fees to Big Apple Bagels under specific circumstances. These fees are to reimburse Big Apple Bagels for any liabilities or costs they incur due to the franchisee's operation of the Big Apple Bagels store or the franchisee's offer or sale of securities. The amount of the indemnification fee varies and is due as incurred.

This means that if a franchisee's actions or business practices lead to legal claims, lawsuits, or other liabilities for Big Apple Bagels, the franchisee will be responsible for covering those costs. This could include legal fees, settlement costs, or any other expenses Big Apple Bagels incurs as a result. The obligation to indemnify Big Apple Bagels extends both to the operation of the store itself and to any activities related to the offer or sale of securities, which may be relevant if the franchisee is raising capital for the business.

Indemnification clauses are common in franchise agreements, as they protect the franchisor from liabilities arising from the franchisee's independent operation of the business. However, it's important for prospective Big Apple Bagels franchisees to understand the scope of this obligation and to ensure they have adequate insurance coverage and business practices in place to minimize the risk of incurring such fees. Franchisees should consult with legal and financial advisors to fully understand their responsibilities and potential liabilities under the franchise agreement.