What entities must a Bombs Away franchisee indemnify and defend?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.1 Indemnity. Franchisee shall indemnify and defend (with counsel reasonably acceptable to Bombs Away Franchising) Bombs Away Franchising, its parent entities, subsidiaries and affiliates, and their respective owners, directors, officers, employees, agents, successors and assignees (collectively, "Indemnitees") against all Losses in any Action by or against Bombs Away Franchising and/or any Indemnitee directly or indirectly related to, or alleged to arise out of, the operation of the Business. Notwithstanding the foregoing, Franchisee shall not be obligated to indemnify an Indemnitee from Actions arising as a result of any Indemnitee's intentional misconduct or negligence. Any delay or failure by an Indemnitee to notify Franchisee of an Action shall not relieve Franchisee of its indemnity obligation except to the extent (if any) that such delay or failure materially prejudices Franchisee. Franchisee shall not settle an Action without the consent of the Indemnitee. This indemnity will continue in effect after this Agreement ends.
- 16.2 Assumption. An Indemnitee may elect to assume the defense of any Action subject to this indemnification and control all aspects of defending the Action (including negotiations and settlement), at Franchisee's expense. Such an undertaking shall not diminish Franchisee's obligation to indemnify the Indemnitees.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to the 2024 Bombs Away Franchise Disclosure Document, a franchisee is required to indemnify and defend Bombs Away Franchising and a group referred to as "Indemnitees." This group includes Bombs Away Franchising, its parent entities, subsidiaries, and affiliates, along with their respective owners, directors, officers, employees, agents, successors, and assignees. This obligation means the franchisee is responsible for protecting these entities from losses in any legal action related to the operation of the Bombs Away business.
However, the franchisee is not obligated to indemnify an Indemnitee from actions arising from the Indemnitee's intentional misconduct or negligence. If an Indemnitee delays notifying the franchisee of an action, the franchisee's obligation to indemnify is only relieved to the extent that the delay materially prejudices the franchisee. The franchisee cannot settle an action without the Indemnitee's consent, and this indemnity obligation continues even after the franchise agreement ends.
Bombs Away retains the right to assume the defense of any action subject to indemnification, controlling all aspects of the defense, including negotiations and settlement, at the franchisee's expense. This assumption of defense does not diminish the franchisee's obligation to indemnify the Indemnitees. This clause is fairly standard in franchise agreements, but it's crucial for prospective Bombs Away franchisees to understand the scope of their potential liability and the importance of maintaining adequate insurance coverage.