Does the indemnity obligation in the Big Blue Swim School DRA include costs of investigation?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Indemnity.
To the maximum extent permitted by law, you and your owners, jointly and severally, agree to indemnify, defend, and forever hold harmless us and our parent and other affiliated entities, and our and their respective officers, directors, owners, principals, employees, agents, representatives, successors, and assigns (collectively, the "Big Blue Parties"), against, and to reimburse the Big Blue Parties for, any losses, liabilities, expenses, or damages (actual or consequential), including, without limitation, reasonable attorneys', attorney assistants', accountants', and expert witness fees, collection costs, costs of investigation and proof of facts, court costs, and other litigation and travel and living expenses, which the Big Blue Parties suffer directly or indirectly arising from or with respect to (a) any breach or alleged breach by you or your owners of any representation or warranty set forth in this DRA, or (b) any claim or allegation by any third party that our signing this DRA with you or granting you the development rights, or any related activities, violate any law or any rights of, or duty owed to, such third party.
Source: Item 23 — RECEIPTS (FDD pages 76–278)
What This Means (2025 FDD)
According to the 2025 Big Blue Swim School FDD, the indemnity clause in the Development Rights Agreement (DRA) does include costs of investigation. Specifically, the franchisee agrees to indemnify Big Blue Swim School and related parties from losses, liabilities, expenses, or damages arising from breaches of the DRA or third-party claims.
This indemnification extends to various costs, including reasonable attorneys' fees, attorney assistants' fees, accountants' fees, expert witness fees, collection costs, court costs, and other litigation expenses. Importantly, it explicitly includes "costs of investigation and proof of facts." This means that if Big Blue Swim School incurs expenses investigating a potential breach or claim related to the franchisee's actions under the DRA, the franchisee is responsible for reimbursing those costs.
This obligation is in addition to other indemnification obligations referenced in the document. The inclusion of investigation costs in the indemnity clause is a significant point for prospective franchisees, as it broadens the scope of potential financial responsibility beyond direct damages or legal judgments. Franchisees should carefully consider this aspect and ensure they understand the potential liabilities associated with the indemnity provision in the Development Rights Agreement.