What are the Buildingstars franchisee's obligations regarding indemnification (Item 9) and how does this relate to potential litigation (Item 3)?
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 expert fees and disbursements arising out of or related to or in any way arising out of the acts or omissions of any Indemnitor, including without limitation (i) any act or omission, negligent or otherwise, of the Indemnitors or anyone directly or indirectly employed by them or anyone for whom they may be liable relative to the Business; (ii) any breach by the Indemnitors of any term or provision of this Agreement; and (iii) the cost, including, but not limited to reasonable attorney's fees, of enforcing this indemnification provision. The obligations of Indemnitors are joint and several.
This indemnification shall not be construed to indemnify an Indemnified Party to the extent such indemnification is prohibited by law, including, an indemnification of any Indemnified Party from its own negligence, if prohibited by law. To the extent indemnification of any party hereunder would be prohibited by law, this provision shall not apply to such party with respect to such otherwise indemnifiable act but shall continue to be effective as to all other parties with respect to whom indemnification is not prohibited by applicable law.
What This Means (2025 FDD)
According to the 2025 Buildingstars Franchise Disclosure Document, franchisees have extensive indemnification obligations to Buildingstars. The franchisee, along with their owners, employees, agents, and other related parties, must indemnify, defend, and hold harmless Buildingstars and its related entities against a wide range of potential damages, losses, liabilities, and costs. This includes any claims, litigation, demands, judgments, and expenses, including attorney's fees, arising from the franchisee's acts or omissions related to the Buildingstars business. This obligation extends to negligence, breaches of the Franchise Agreement, and the costs of enforcing the indemnification provision itself. The obligations of those indemnifying Buildingstars are joint and several, meaning each is fully liable.
However, the indemnification is not absolute. It does not extend to situations where it is prohibited by law, such as indemnifying Buildingstars for its own negligence, if such indemnification is legally disallowed. The indemnification clause is still effective for all other parties and situations where indemnification is permitted by law.
Furthermore, the Franchise Agreement stipulates several limitations on legal actions. Buildingstars will not be liable for prospective profits or special, indirect, punitive, or consequential damages. Franchisees waive their right to a jury trial and to participate in class action lawsuits against Buildingstars. Franchisees must bring any claims within one year of discovering the facts giving rise to the claim, and Buildingstars' maximum liability is limited to the amount the franchisee paid to Buildingstars in the 12 months before the claim. These limitations on legal actions, combined with the broad indemnification obligations, place a significant responsibility on the franchisee to manage their business in a way that minimizes potential liabilities and legal disputes.