Can an Indemnified Party defend themselves in a claim and charge the Body20 franchisee for the costs?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.2 Indemnification Procedure. You agree to defend the Indemnified Parties against any and all claims asserted or inquiries made (formally or informally), or legal actions, investigations, or other proceedings brought, by a third party and directly or indirectly arising out of or relating to any matter described in Subsection 11.1(i) through (iv) above (collectively, "Proceedings"), including those alleging the Indemnified Party's negligence, gross negligence, willful misconduct and/or willful wrongful omissions. Each Indemnified Party may at your expense defend and otherwise respond to and address any claim asserted or inquiry made, or Proceeding brought, that is subject to this Section 11 (instead of having you defend it as required above), and agree to settlements or take any other remedial, corrective, or other actions, for all of which defense and response costs and other Losses you are solely responsible, subject to Section 11.3 (Willful Misconduct or Gross Negligence). An Indemnified Party need not seek recovery from any insurer or other third party, or otherwise mitigate its Losses, in order to maintain and recover fully a claim against you, and you agree that a failure to pursue a recovery or mitigate a Loss will not reduce or alter the amounts that an Indemnified Party may recover from you under this Section 11. Your obligations in this Section 11 will survive the expiration or termination of this Agreement.
11.3 Willful Misconduct or Gross Negligence. Despite Section 11.1, you have no obligation to indemnify or hold harmless an Indemnified Party for, and we will reimburse you for, any Losses (including costs of defending any Proceeding under Section 11.2) to the extent they are determined in a final, unappealable ruling issued by a court or arbitrator with competent jurisdiction to have been caused solely and directly by the Indemnified Party's willful misconduct or gross negligence, so long as the claim to which those Losses relate is not asserted on the basis of theories of vicarious liability (including agency, apparent agency, or employment) or our failure to compel you to comply with this Agreement. However, nothing in this Section 11.3 limits your obligation to defend us and the other Indemnified Parties under Section 11.2.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, the Indemnified Parties, which include Body20, its affiliates, and their respective owners, directors, officers, employees, agents, representatives, successors, and assignees, have the right to defend themselves against any claims or inquiries arising from specific situations outlined in the agreement. These situations include the Studio's operation, the franchisee's business conduct, breaches of the agreement, or noncompliance with laws and regulations.
Specifically, Body20 can choose to defend itself in any legal actions, investigations, or proceedings brought by a third party related to these matters. If Body20 chooses to defend itself, the franchisee is responsible for covering all associated expenses. These expenses include defense and response costs and other losses, unless the Indemnified Party's willful misconduct or gross negligence caused the losses, as determined by a final, unappealable ruling from a competent court or arbitrator. However, this exception does not limit the franchisee's obligation to defend Body20 and other Indemnified Parties.
This means that as a Body20 franchisee, you could be responsible for significant legal costs if a claim is made against Body20 related to your studio's operations or your conduct of business. It is important to understand the scope of the indemnification clause and to ensure you have adequate insurance coverage to protect yourself against potential claims. Furthermore, it is crucial to operate your Body20 studio in compliance with all applicable laws and regulations to minimize the risk of claims that could trigger the indemnification clause.