Does the indemnity obligation of the Lessee to Bimbo Foods Bakeries Distribution survive the termination of the lease?
Bimbo_Foods_Bakeries_Distribution Franchise · 2025 FDDAnswer from 2025 FDD Document
Lessee shall indemnify Lessor against, and hold Lessor harmless from any and all claims, actions, damages including reasonable attorneys fees and costs obligations, liabilities, and liens (including any arising or imposed under the doctrines or Strict Liability in tort or Product Liability), arising out of manufacture, purchase, lease, possession, operation, condition, return or use of Equipment, or by operation of law, excluding however any of foregoing resulting solely from the gross negligence or willful misconduct of Lessor.
Lessee agrees that upon written notice by Lessor of assertion of such claim, action, damage, obligation, liability or lien, Lessee shall assume full responsibility for defense thereof.
Lessor shall have the right, but not the obligation, to participate in any defense conducted by Lessee without relieving Lessee of any of its obligations hereunder.
The provisions of this paragraph shall survive termination of this Lease.
Source: Item 14 — Other Accounts Payable and Accrued Liabilities (FDD pages 312–476)
What This Means (2025 FDD)
According to Bimbo Foods Bakeries Distribution's 2025 Franchise Disclosure Document, the indemnity obligations of the lessee to the lessor survive the termination of the lease. Specifically, the lease states that the lessee must indemnify the lessor against claims, actions, damages, and costs, including attorney's fees, arising from the equipment's manufacture, purchase, lease, possession, operation, condition, return, or use. This obligation extends to liabilities and liens, including those arising from strict liability in tort or product liability, but excludes issues resulting solely from the gross negligence or willful misconduct of the lessor.
This means that even after the lease is terminated, a Bimbo Foods Bakeries Distribution franchisee (as lessee) could still be responsible for costs and damages related to the leased equipment. For example, if someone is injured due to a defect in the equipment after the lease ends, the franchisee could be liable for the resulting claims, legal fees, and other expenses. This survival clause is a significant point for prospective franchisees to consider, as it represents a long-term potential liability that extends beyond the active lease period.
It is common in franchise agreements and commercial leases to include clauses that extend certain obligations beyond the termination of the agreement. This protects the franchisor (or lessor) from liabilities that may arise after the agreement ends but are related to the franchisee's (or lessee's) actions during the term of the agreement. Franchisees should carefully review these clauses with legal counsel to fully understand the scope of their responsibilities and potential liabilities. Franchisees should also ensure they maintain adequate insurance coverage to protect against potential claims.