Does a Brueggers Bagels franchisee have to indemnify LMFC against employee claims?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
You alone will direct and control all employees of the Bakery, subject only to applicable legal requirements, the terms of this Agreement, and the standards that we prescribe for the preservation of the goodwill associated with the Proprietary Marks.
You may not use any of the Proprietary Marks in connection with any employee documents (such as employment applications, paychecks, pay stubs, benefits materials, employee handbooks, and employment agreements) without a prominent notice on the document that you are a franchisee of LMFC and that neither LMFC nor its affiliates is the employer of anyone working in the Bakery.
At our request, made not more often than once every six months, you must communicate by a means reasonably calculated to reach all of your current employees a reminder that LMFC is not their employer, and that LMFC and its affiliates do not assume and will not accept any employer, co-employer or joint employer obligations.
You agree to indemnify us and our affiliates against any claims by your employees and any claims by government agencies relating to workers employed at the Bakery, as provided in Section 22.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to the 2025 Brueggers Bagels Franchise Disclosure Document, the franchisee is required to indemnify Brueggers Bagels and its affiliates against claims made by the franchisee's employees. Specifically, the franchisee agrees to protect Brueggers Bagels from any claims or legal actions brought by the workers employed at the franchisee's Bakery, as detailed in Section 22 of the franchise agreement. LMFC is identified in the document as the franchisor.
This obligation means that if an employee of the Brueggers Bagels franchisee brings a lawsuit or claim against Brueggers Bagels (LMFC) related to their employment at the franchise location, the franchisee will be responsible for covering the legal costs and any resulting damages. This includes claims related to workplace injuries, discrimination, wage disputes, or other employment-related issues. The franchisee is responsible for directing and controlling all employees of the Bakery, and LMFC is not considered the employer of anyone working in the Bakery.
Brueggers Bagels also requires the franchisee to include a notice in employee documents stating that the franchisee is an independent operator and that LMFC is not the employer. Furthermore, Brueggers Bagels can request the franchisee to remind employees that LMFC is not their employer and does not accept any employer obligations. This requirement is designed to reinforce the separation between the franchisor and the franchisee's employees, but the franchisee ultimately bears the responsibility for employment-related claims.
This indemnification clause is a significant responsibility for the franchisee, as it could potentially involve substantial costs depending on the nature and extent of any employee claims. Prospective franchisees should carefully consider this obligation and ensure they have adequate insurance coverage and human resources practices in place to minimize the risk of employee claims. It is also advisable to seek legal counsel to fully understand the implications of this indemnification requirement.