Is the Brueggers Bagels franchisor indemnified for damages caused by their own negligence?
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 the 2025 Brueggers Bagels Franchise Disclosure Document, the franchisee must indemnify the franchisor for damages, even if those damages are partly or wholly caused by the franchisor's negligence. Specifically, the franchisee agrees to defend and hold harmless the franchisor from various claims and expenses. This obligation extends to damages to property of the franchisee or franchisor, their agents or employees, or any third party. This applies whether the damages were allegedly caused through the active or passive negligence of Brueggers Bagels or its agents or employees, or resulted from strict liability imposed on them.
This requirement means that a Brueggers Bagels franchisee could be responsible for covering the franchisor's legal costs and damages in situations where the franchisor's actions contributed to the issue. This is a significant obligation for the franchisee, as it shifts some of the risk associated with the business operations to them. The franchisee's responsibility includes all expenses, encompassing reasonable attorneys' fees, related to actions, suits, proceedings, claims, demands, investigations or formal or informal inquiries, regardless of whether they are reduced to judgment.
Such clauses are not uncommon in franchise agreements, but prospective franchisees should carefully consider the scope of this indemnification. It is important to understand the potential financial burden and to assess the risks associated with the franchisor's potential negligence. Franchisees should consult with legal counsel to fully understand the implications of this clause and to evaluate their insurance coverage in relation to these potential liabilities. This indemnification extends to the "Indemnitees" which includes the 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.