What is the Bombs Away franchisee's obligation to defend Bombs Away Franchising against Losses?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
greement.** Franchisee shall not grant a security interest in this Agreement to any person or entity. If Franchisee grants an "all assets" security interest to any lender or other secured party, Franchisee shall cause the secured party to expressly exempt this Agreement from the security interest.
ARTICLE 16. INDEMNITY
- 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.
ARTICLE 17. DISPUTE RESOLUTION
17.1 Arbitration.
- (a) Disputes Subject to Arbitration.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, a franchisee is required to indemnify and defend Bombs Away Franchising, including its parent entities, subsidiaries, affiliates, and their respective owners, directors, officers, employees, agents, successors, and assignees against all losses in any action against Bombs Away Franchising that is directly or indirectly related to the operation of the franchisee's business. This defense must be conducted with counsel reasonably acceptable to Bombs Away Franchising. This obligation to defend Bombs Away Franchising extends even after the franchise agreement ends.
However, the franchisee is not obligated to indemnify Bombs Away Franchising from actions arising from the franchisor's intentional misconduct or negligence. If Bombs Away Franchising delays notifying the franchisee of an action, this will only relieve the franchisee of their obligation to the extent that the delay materially prejudices the franchisee. The franchisee is not allowed to settle any action without the consent of Bombs Away Franchising.
Bombs Away Franchising can elect to assume the defense of any action and control all aspects of the defense, including negotiations and settlement, at the franchisee's expense. However, this does not diminish the franchisee's obligation to indemnify Bombs Away Franchising. The term 'Losses' is broadly defined in the FDD and includes all losses, damages, fines, expenses, lost profits, attorney's fees, travel expenses, expert witness fees, court costs, settlement amounts, judgments, loss of goodwill, costs of delays, financing, advertising costs, and expenses of recalls, refunds, and public notices.