Does the existence or non-existence of insurance coverage limit the Brain Balance franchisee's indemnification obligations?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) FRANCHISEE agrees at its cost to protect, defend, indemnify, and hold COMPANY, its parent if any, or any affiliate or subsidiary corporation, or assigns, and their respective directors, officers, shareholders, and members jointly and severally harmless from and against all claims, actions, proceedings, damages, costs, expenses, and other losses and liabilities, directly or indirectly incurred (including without limitation attorneys' and accountants' fees), in connection with any action, suit, proceeding, claim, demand, investigation, or formal or informal inquiry (regardless of whether the same is reduced to judgment) or any settlement thereof, as a result of, arising out of, or connected with the operation of the Franchised Business. This indemnity shall in no way be limited by the existence or non-existence of insurance coverage and shall also apply to claims, actions, proceedings, damages, costs, expenses, and other losses and liabilities not covered either under deductible provisions of such insurance coverage or in excess of insurance coverage required hereunder or otherwise not covered.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, a franchisee's indemnification obligations are not limited by the existence or non-existence of insurance coverage. The franchisee is responsible for protecting, defending, and indemnifying Brain Balance against all claims, actions, proceedings, damages, costs, expenses, and other losses and liabilities connected with the operation of the franchised business. This includes, but is not limited to, attorney's and accountant's fees.
This indemnification extends to situations where insurance coverage is insufficient, such as claims exceeding the coverage limits or those falling under deductible provisions. It also applies to losses, compensatory, exemplary, or punitive damages, fines, charges, costs, expenses, lost profits, attorney's fees, experts' fees, court costs, settlement amounts, judgment, compensation for damages to Brain Balance's reputation and goodwill, costs of or resulting from delays, financing, costs of advertising material and media time/space, and costs of changing, substituting or replacing same, and any and all expenses of refunds, compensation, public notices, and other such amounts incurred in connection with the matters described.
The franchisee must notify Brain Balance of any action, lawsuit, proceeding, claim, demand, inquiry, or investigation. Brain Balance has the option, but not the obligation, to assume the defense and/or settlement of any such action. However, even if Brain Balance undertakes the defense or settlement, the franchisee's obligation to indemnify Brain Balance remains in full effect. This means that even if Brain Balance handles the legal proceedings, the franchisee is still ultimately responsible for covering the associated costs and liabilities.