Under what circumstances is the Lessee required to indemnify Bimbo Foods Bakeries Distribution?
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 lessee (franchisee) is required to indemnify the lessor (Bimbo Foods Bakeries Distribution) against claims, actions, damages, obligations, liabilities, and liens arising from several circumstances. These circumstances include those arising out of the manufacture, purchase, lease, possession, operation, condition, return, or use of the equipment. This also extends to liabilities arising under doctrines of strict liability in tort or product liability. However, the franchisee is not responsible for issues resulting solely from the gross negligence or willful misconduct of Bimbo Foods Bakeries Distribution.
This means that as a Bimbo Foods Bakeries Distribution franchisee, you are responsible for covering the legal costs and damages that Bimbo Foods Bakeries Distribution incurs due to your operation of the leased equipment. This includes potential product liability claims or damages caused by the use of the equipment. It is important to note that this obligation survives the termination of the lease, meaning that even after the lease ends, you could still be liable for these types of claims if they arise from your period of operation.
The franchisee must assume full responsibility for the defense of any claim upon written notice from Bimbo Foods Bakeries Distribution. Bimbo Foods Bakeries Distribution has the right, but not the obligation, to participate in the defense without relieving the franchisee of their obligations. This clause ensures that Bimbo Foods Bakeries Distribution can oversee the defense of any claim that could impact their interests, while the franchisee remains primarily responsible for managing and funding the defense.
This type of indemnification clause is common in franchise agreements, as it protects the franchisor from liabilities arising from the franchisee's operations. However, it also places a significant responsibility on the franchisee to maintain adequate insurance and operate the business in a way that minimizes the risk of claims. Prospective franchisees should carefully consider the potential costs and risks associated with this indemnification obligation and consult with legal counsel to fully understand their responsibilities.