What costs must a Brueggers Bagels franchisee cover when defending the franchisor in an indemnification claim?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees at all times to defend at their own cost, and to indemnify and hold harmless to the fullest extent permitted by law, Franchisor, its partners or any limited partner, its subsidiaries, and other entities owned by it, its affiliates (including without limitation all entities and persons owned by or owning, directly or indirectly, an interest in Franchisor, or its successors, assigns and designees of any such entity, officers, directors, employees, agents, contractors, and other entities and persons providing services for or otherwise acting on behalf of Franchisor (including, without limitation, Franchisor's affiliates in any capacity or role), and the respective directors, officers, employees, agents, shareholders, members, managers, partners, designees, and representatives of each (Franchisor and all of such others referred to herein collectively as "Indemnitees") from all damages, losses, expenses (including without limitation reasonable attorneys' fees), actions, suits, proceedings, claims, demands, investigations, or formal or informal inquiries (regardless of whether same is reduced to judgment) or any settlement thereof which arises out of or is based upon or related to any of the following: (a) Franchisee's alleged infringement or any other violation or any other alleged violation of any patent, trademark or copyright or other proprietary right owned or controlled by third parties; (b) Franchisee's alleged violation or breach of any contract, federal, state or local law, regulation, ruling, standard or directive of any industry standard; (c) libel, slander or any other form of defamation by Franchisee; (d) Franchisee's alleged violation or breach of any warranty, representation, agreement or obligation in this Agreement; (e) any acts, errors or omissions of Franchisee or any of its agents, servants, employees, contractors, partners, proprietors, affiliates, or representatives; (f) latent or other defects in the Bakery, whether or not discoverable by Franchisor or Franchisee; (g) the inaccuracy, lack of authenticity or nondisclosure of any information by any customer of the Bakery; (h) any services or products provided by Franchisee at, from or related to the operation at the Bakery; (i) any services or products provided by any affiliated or nonaffiliated participating entity; (j) any action by any customer of the Bakery; and, (k) any damage to the property of franchisee or franchisor, their agents or employees, or any third person, firm, corporation or other legal entity, whether or not such losses, claims, costs, expenses, damages, or liabilities were actually or allegedly caused wholly or in part through the active or passive negligence of franchisor or any of its agents or employees, or resulted from any strict liability imposed on franchisor or any of its agents or employees.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, the franchisee is responsible for defending the franchisor, at the franchisee's own cost, against various claims. This obligation extends to indemnifying and holding harmless the franchisor and its affiliates to the fullest extent permitted by law. This includes the franchisor, its partners, subsidiaries, entities they own, affiliates, and their respective personnel.
The franchisee's duty to defend and indemnify covers a wide range of potential issues. These include claims related to the franchisee's alleged infringement of patents, trademarks, copyrights, or other proprietary rights of third parties. It also encompasses alleged violations or breaches of contracts, federal, state, or local laws, regulations, rulings, or industry standards. Furthermore, the franchisee is responsible for defending against claims arising from libel, slander, or any other form of defamation they commit.
This indemnification extends to breaches of warranty, representation, agreement, or obligation within the Franchise Agreement. It also includes any acts, errors, or omissions by the franchisee or their agents, employees, or representatives. The franchisee is also responsible for latent or other defects in the bakery, regardless of discoverability, and inaccuracies or nondisclosure of information by the bakery's customers. This obligation further extends to any services or products provided by the franchisee, actions by customers, and damage to property, even if caused by the franchisor's negligence.
In practical terms, this means a Brueggers Bagels franchisee could face significant legal expenses if a claim arises from their business operations and the franchisor is named in the suit. The franchisee would be responsible for covering all costs associated with defending the franchisor, including attorney's fees, regardless of whether the claim is successful. This represents a substantial potential financial risk for franchisees and is a common clause in franchise agreements.