Under what circumstances is the Big Apple Bagels franchisee NOT required to indemnify the franchisor?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
- f. Indemnification of Franchisee. Franchisor agrees to indemnify Franchisee against and to reimburse Franchisee for all direct, but not consequential (including, but not limited to, loss of revenue and/or profits), damages for which Franchisee is held liable in any proceeding arising out of the use of any Mark pursuant to and in compliance with this Agreement, and for all costs reasonably incurred by Franchisee in the defense of any such claim brought against it or in any such proceeding in which it is named as a party, provided that Franchisee has timely notified Franchisor of such claim or proceeding and has otherwise complied with this Agreement, and that Franchisor shall have the right to defend any such claim. If Franchisor defends such claim, Franchisor shall have no obligation to indemnify or reimburse Franchisee with respect to any fees or disbursements of any attorney retained by Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, a franchisee is generally required to indemnify the franchisor under specific circumstances. However, the franchisor agrees to indemnify the franchisee against direct damages (excluding consequential damages like lost revenue or profits) for which the franchisee is held liable in any proceeding arising out of the use of any Mark, provided that the franchisee's use of the Mark is pursuant to and in compliance with the Franchise Agreement.
This indemnification extends to all costs reasonably incurred by the franchisee in defending against any such claim or proceeding in which they are named as a party. However, this protection is conditional. The franchisee must promptly notify Big Apple Bagels of any claim or proceeding and must otherwise be in compliance with the Franchise Agreement.
Furthermore, Big Apple Bagels retains the right to defend any such claim. If Big Apple Bagels chooses to defend the claim, they are not obligated to indemnify or reimburse the franchisee for any fees or disbursements of any attorney retained by the franchisee. This clause ensures that Big Apple Bagels maintains control over the legal defense strategy while also setting limits on their financial responsibility to the franchisee in such cases.