What actions or inactions by a Black Bear Diner franchisee's employees could trigger the franchisee's indemnification obligations?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
20.2 Indemnification by Franchisee
Franchisee and Personal Guarantors agree to indemnify, defend, and hold harmless Franchisor, its current and former affiliates, and their respective past and present shareholders, directors, officers, employees, agents, successors, and assignees (the "Indemnified Parties") against, and to reimburse any one or more of the Indemnified Parties for, all claims, obligations, and damages directly or indirectly arising out of the Franchised Restaurant's operation, the business Franchisee conducts under this Agreement, Franchisee's or Franchisee's employees actions or inaction, or Franchisee's breach of this Agreement, including, without limitation, those alleged to be or found to have been caused by the Indemnified Party's negligence, unless (and then only to the extent that) the claims, obligations, or damages are determined to be caused solely by our gross negligence or willful misconduct in a final, unappealable ruling issued by a court or arbitrator with competent jurisdiction.
For purposes of this indemnification, "claims" include all obligations, damages (actual, consequential, or otherwise), and costs that any Indemnified Party reasonably incurs in defending any claim against it, including, without limitation, reasonable accountants', arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses of litigation, arbitration, or alternative dispute resolution, regardless of whether litigation, arbitration, or alternative dispute resolution is commenced. Each Indemnified Party may defend any claim against it at Franchisee's expense and agree to settlements or take any other remedial, corrective, or other actions.
This indemnity will continue in full force and effect subsequent to and notwithstanding this Agreement's expiration or termination. An Indemnified Party need not seek recovery from any insurer or other third party, or otherwise mitigate its losses and expenses, in order to maintain and recover fully a claim against you under this subparagraph. Franchisee agrees that a failure to pursue a recovery or mitigate a loss will not reduce or alter the amounts that an Indemnified Party may recover under this subparagraph.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, a franchisee can be required to indemnify Black Bear Diner for claims, obligations, and damages that directly or indirectly arise from the operation of the franchised restaurant or from the actions or inactions of the franchisee's employees. This means that if an employee's actions (or failure to act) lead to a claim or damage, the franchisee may have to cover the costs. This indemnification extends to the franchisor, its affiliates, and their shareholders, directors, officers, employees, agents, successors, and assignees.
The franchisee's responsibility to indemnify Black Bear Diner includes covering all obligations, damages (both actual and consequential), and costs incurred in defending against any claim. These costs can include reasonable fees for accountants, arbitrators, attorneys, and expert witnesses, as well as costs for investigation, proof of facts, court costs, travel, and living expenses. The franchisee is responsible for these expenses regardless of whether litigation or arbitration is formally commenced.
However, there is an exception: the franchisee is not responsible for indemnification if the claims, obligations, or damages are determined to be caused solely by Black Bear Diner's gross negligence or willful misconduct, as decided by a court or arbitrator. The franchisee's duty to indemnify continues even after the franchise agreement expires or is terminated. Black Bear Diner is not required to seek recovery from any insurer or mitigate its losses before making a claim against the franchisee.