Under what conditions is a Brightstar Care franchisee NOT obligated to indemnify an Indemnified Party?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
Unless it is established that a third party claim asserted against you is based, directly or indirectly, on your misuse of the Licensed Marks or the BrightStar Care Agency Program, we agree to defend you against a third party claim disputing your authorized use of any Licenses Mark or the BrightStar Care Agency Program, provided you have notified us immediately after learning of the claim and fully cooperate in defending the action. Because we will defend this particular third-party claim, you are not entitled to be reimbursed for legal or other professional fees or costs paid to independent legal counsel or others in connection with the matter. However, we will reimburse your actual out-of-pocket damages suffered (but not any lost profits or consequential damages) if it is determined in the action that we did not in fact have the right to authorize you to use the Licensed Mark or the BrightStar Care Agency Program. This reimbursement obligation does not impact our rights and your obligations under Section 5.5 of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 117–118)
What This Means (2025 FDD)
According to Brightstar Care's 2025 Franchise Disclosure Document, the franchisee's obligation to defend against third-party claims regarding the Licensed Marks or the Brightstar Care Agency Program is waived if the claim is based on the franchisee's misuse of these assets. However, Brightstar Care will defend the franchisee against third-party claims disputing the authorized use of any Licensed Mark or the Brightstar Care Agency Program, provided the franchisee notifies Brightstar Care immediately after learning of the claim and fully cooperates in defending the action.
If Brightstar Care defends the franchisee against such a third-party claim, the franchisee is not entitled to reimbursement for legal or other professional fees paid to independent counsel. However, Brightstar Care will reimburse the franchisee for actual out-of-pocket damages suffered (excluding lost profits or consequential damages) if it is determined that Brightstar Care did not have the right to authorize the franchisee's use of the Licensed Mark or the Brightstar Care Agency Program.
This arrangement means that Brightstar Care takes responsibility for defending the brand and system against external challenges, but franchisees must ensure they use the Licensed Marks and program correctly. If a franchisee misuses these assets, they are responsible for their own defense. If Brightstar Care is responsible for the claim, they will cover damages, but not lost profits. This allocation of responsibility is typical in franchising, where the franchisor protects the brand and the franchisee operates within the system's guidelines.