Does the Buildingstars franchise agreement specify that the franchisee must defend Buildingstars against claims?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
To the fullest extent permitted by law, FRANCHISEE, for itself and its owners, employees, agents, officers, directors, members, managers, parents, subsidiaries, affiliates, successors and assigns ("Indemnitors"), agree, at their sole cost and expense, to indemnify, defend and hold harmless, and to reimburse on demand BUILDINGSTARS and all entities related to BUILDINGSTARS and their respective shareholders, directors, officers, members, managers, employees agents, partners, attorneys, licensees, affiliates successors and assigns ("Indemnified Parties") for and against any and all damages, losses, liabilities, bodily injury, property damage, obligations, penalties, fines, claims, litigation, demands, defenses, judgments, suit proceedings, administrative orders, consent agreements, costs, disbursements or expenses of any kind or any nature whatsoever, including without limitation, reasonable attorneys' and
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the franchisee is obligated to defend Buildingstars against claims. Specifically, the Buildingstars franchise agreement states that the franchisee, at their sole cost and expense, must indemnify and defend Buildingstars and its related entities against any and all damages, losses, liabilities, bodily injury, property damage, obligations, penalties, fines, claims, litigation, demands, defenses, judgments, suit proceedings, administrative orders, consent agreements, costs, disbursements or expenses of any kind. This obligation extends to the fullest extent permitted by law.
This means that if a claim or lawsuit is brought against Buildingstars due to the franchisee's business operations, the franchisee will be responsible for covering Buildingstars's legal defense costs, including attorney's fees, and any resulting judgments or settlements. This requirement highlights a significant financial responsibility for the franchisee, as defense costs can be substantial, regardless of the merit of the claim.
Franchisees should be aware of the potential financial burden associated with this indemnification and defense obligation. It is common practice in franchising for franchisees to indemnify the franchisor, but the scope of the indemnification can vary. Prospective franchisees should carefully review this section of the franchise agreement with legal counsel to fully understand their obligations and potential liabilities.
To mitigate this risk, Buildingstars requires franchisees to maintain certain insurance coverages, naming Buildingstars as an additional insured. However, franchisees should consult with their own insurance agent to determine if the required coverage is adequate to protect their interests, as Buildingstars makes no representation that the required policies and amounts are sufficient for the franchisee's needs.