What are some specific situations that trigger the Browns Chicken franchisee's indemnification obligations?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee will, and hereby does, indemnify and defend Brown and its Affiliates and their respective officers, directors, owners, agents, representatives, employees, successors and assigns, from and against all losses, costs, liabilities, damages, claims, and expenses of every kind, including allegations of negligence by Brown and its Affiliates and their officers, employees, and agents, to the fullest extent permitted by Applicable Law, and including reasonable attorneys' fees, arising out of, resulting from or related to: (i) the unauthorized use of the Trademarks; (ii) the violation of Applicable Law; and (iii) the construction, renovation, upgrading, alteration, remodeling, repair, operation, ownership and use of the BROWN Store. Franchisee must promptly give notice to Brown of any action, suit, proceeding, claim, demand, inquiry, or investigation related to the foregoing. Brown will have the right, through counsel of its choice, at Franchisee's expense, to control the defense and response to any such action, and such undertaking by Brown will not, in any manner, diminish Franchisee's obligations to Brown. Under no circumstances will Brown or a person indemnified be required to seek recovery from third parties or mitigate its losses in order to maintain a claim for indemnification against Franchisee under this Agreement, and the failure to pursue such recovery or mitigate a loss will in no way reduce the amounts recoverable from Franchisee by a person indemnified. Franchisee's obligations under this Section will survive the termination or expiration of this Agreement.
Brown agrees to indemnify Franchisee against and to reimburse Franchisee for any obligations or liability for damages attributable to agreements, representations or warranties of Brown (except such agreements as Brown shall make on behalf of Franchisee in developing the Store, if any), or caused by the negligence or willful action of Brown, and for costs (as hereinabove defined) reasonably incurred by Franchisee in the defense of any such claim brought against it or in any action in which Franchisee is named as a party, provided that Brown shall have the right to participate in and, to the extent Brown deems necessary, to control, any litigation or proceeding which might result in liability of or expense to Franchisee subject to such indemnification. Brown's indemnification shall not apply in the event Franchisee contributed to the harm.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, the franchisee is obligated to indemnify Browns Chicken and its affiliates under certain circumstances. Specifically, the franchisee must indemnify Browns Chicken against all losses, costs, liabilities, damages, claims, and expenses, including attorney's fees, arising from (i) the unauthorized use of the Trademarks, (ii) the violation of Applicable Law, and (iii) the construction, renovation, upgrading, alteration, remodeling, repair, operation, ownership and use of the BROWN Store. This indemnification extends to allegations of negligence by Browns Chicken and its affiliates.
This means that if a Browns Chicken franchisee uses the trademarks without authorization, violates any applicable laws, or if issues arise from the construction, operation, or maintenance of the store, the franchisee is responsible for covering Browns Chicken's associated costs and legal liabilities. Browns Chicken has the right to control the defense in any related legal action, at the franchisee's expense, without reducing the franchisee's indemnification obligations. Browns Chicken is not required to seek recovery from third parties or mitigate its losses before claiming indemnification from the franchisee.
Browns Chicken, however, also agrees to indemnify the franchisee against obligations or liabilities for damages attributable to agreements, representations, or warranties made by Browns Chicken (excluding agreements made on behalf of the franchisee in developing the store) or caused by Browns Chicken's negligence or willful actions. This also includes costs incurred by the franchisee in defending against claims or actions where the franchisee is named as a party. However, Browns Chicken's indemnification does not apply if the franchisee contributed to the harm. Browns Chicken retains the right to participate in and control any litigation that could result in liability or expense to the franchisee, subject to this indemnification.
In essence, the indemnification clauses in the Browns Chicken franchise agreement outline the specific situations where either the franchisee or franchisor is responsible for covering the other party's losses, costs, and liabilities. This allocation of risk is a common practice in franchising, designed to protect both parties from potential legal and financial burdens arising from the operation of the franchise. Prospective franchisees should carefully review these clauses with legal counsel to fully understand their obligations and potential liabilities.