Does the Brain Balance franchisee's indemnification obligation extend to losses covered by insurance, and if so, how?
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, the franchisee's indemnification obligation is not limited by the existence or non-existence of insurance coverage. The franchisee agrees to protect, defend, indemnify, and hold Brain Balance harmless from all claims, actions, proceedings, damages, costs, expenses, and other losses and liabilities connected with the operation of the franchised business. This obligation extends to situations regardless of insurance coverage.
Specifically, the indemnification applies to claims, actions, proceedings, damages, costs, expenses, and other losses and liabilities not covered under deductible provisions of insurance coverage, in excess of required insurance coverage, or otherwise not covered by insurance. This means that even if the franchisee has insurance, they are still responsible for indemnifying Brain Balance for any amounts not covered by the insurance policy, including deductibles or amounts exceeding the policy limits.
This broad indemnification clause places a significant financial responsibility on the Brain Balance franchisee. It's crucial for prospective franchisees to understand that they could be liable for substantial costs, even if they maintain insurance coverage. Franchisees should carefully review their insurance policies and consider obtaining additional coverage to mitigate this risk. They should also consult with a legal and financial advisor to fully understand the implications of this indemnification clause.