Is Bombs Away required to indemnify a franchisee for expenses or damages in a proceeding involving a copyright licensed to the franchisee?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 14 — Patents, Copyrights, and Proprietary Information (FDD pages 25–26)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, franchisees are generally required to indemnify Bombs Away and its related entities against losses in legal actions related to the operation of the franchise business. However, this obligation does not extend to actions arising from the intentional misconduct or negligence of Bombs Away itself.
Specifically, Article 16.1 states that the franchisee must indemnify and defend Bombs Away against all losses in any action related to the operation of the business. This includes legal expenses, damages, and other costs. However, the franchisee is not required to indemnify Bombs Away if the action arises from Bombs Away's intentional misconduct or negligence. This means that if a copyright infringement claim arises due to Bombs Away's actions, the franchisee may not be responsible for covering Bombs Away's losses.
Article 16.2 allows Bombs Away to assume the defense of any action subject to indemnification at the franchisee's expense. However, this does not diminish the franchisee's obligation to indemnify Bombs Away. The franchisee is not allowed to settle any action without Bombs Away's consent. This indemnity agreement remains in effect even after the franchise agreement ends, meaning potential liabilities could extend beyond the term of the agreement.