Is the Bumper Man franchisor obligated for damages arising out of the operation of the business?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE, ON ITS BEHALF AND ON BEHALF OF ITS AFFILIATES AND PRINCIPALS, WILL INDEMNIFY, DEFEND AND HOLD HARMLESS THE FRANCHISOR INDEMNITEES AGAINST AND REIMBURSE ANY ONE OR MORE OF THE FRANCHISOR INDEMNITEES FOR ANY AND ALL LOSSES AND EXPENSES ARISING OUT OR FROM OR RELATED TO, ANY CLAIMS, DIRECTLY OR INDIRECTLY, ARISING OUT OR FROM OR RELATED TO: (A) THE OPERATION OR CLOSING OF THE BUMPER BUSINESS; (B) ANY BREACH OF THIS AGREEMENT BY FRANCHISEE, ITS AFFILIATES OR ANY PRINCIPAL, OR FRANCHISEE'S, ITS AFFILIATES' OR ANY PRINCIPAL'S BREACH OF ANY OTHER AGREEMENT BETWEEN FRANCHISOR OR ITS AFFILIATES AND FRANCHISEE, ITS AFFILIATES, (C) THE MARKETING, PROMOTION OR ADVERTISEMENT OF THE BUMPER BUSINESS OR DESIGNATED SERVICES OFFERED BY THE BUMPER BUSINESS, INCLUDING UNFAIR OR FRAUDULENT ADVERTISING CLAIMS (WHETHER IN PRINT ADVERTISING OR ELECTRONIC MEDIA), OR (D) FRANCHISEE'S PERFORMANCE OF BUMPER REPAIR SERVICES FOR ANY INDIVIDUAL CONSUMER.
FRANCHISOR HAS THE RIGHT, AT ITS OPTION, TO DEFEND ANY SUCH CLAIM AGAINST IT AT FRANCHISEE'S SOLE COST AND EXPENSE. IF FRANCHISEE DEFENDS ANY CLAIM, IT MAY NOT ENTER INTO ANY SETTLEMENT AGREEMENT OR OTHERWISE RESOLVE OR CONCLUDE THE MATTER WITHOUT FRANCHISOR'S PRIOR WRITTEN CONSENT. THIS INDEMNITY WILL CONTINUE IN FULL FORCE AND EFFECT SUBSEQUENT TO, AND NOTWITHSTANDING, THE EXPIRATION OR TERMINATION OF THIS AGREEMENT. UNDER NO CIRCUMSTANCES WILL FRANCHISOR OR ANY OTHER FRANCHISOR INDEMNITEES BE REQUIRED TO SEEK RECOVERY FROM ANY INSURER OR OTHER THIRD PARTY, OR OTHERWISE TO MITIGATE ITS OR FRANCHISEE'S LOSSES AND EXPENSES, IN ORDER TO MAINTAIN AND RECOVER FULLY A CLAIM AGAINST FRANCHISEE. ANY FAILURE TO PURSUE SUCH RECOVERY OR MITIGATE A LOSS WILL IN NO WAY REDUCE OR ALTER THE AMOUNTS RECOVERABLE BY FRANCHISOR OR ANOTHER FRANCHISOR INDEMNITEE FROM FRANCHISEE.
Source: Item 23 — RECEIPTS (FDD pages 45–180)
What This Means (2025 FDD)
According to the 2025 Bumper Man Franchise Disclosure Document, the franchisee is responsible for indemnifying the franchisor. Specifically, the franchisee must indemnify, defend, and hold harmless the franchisor against any losses and expenses related to claims arising from the operation or closing of the Bumper Man business. This also includes claims related to any breach of the franchise agreement by the franchisee, or the franchisee's affiliates or principals, and the marketing, promotion, or advertisement of the Bumper Man business, including unfair or fraudulent advertising claims. Furthermore, the franchisee is responsible for claims arising from the franchisee's performance of bumper repair services for any individual consumer.
Bumper Man has the right, at its option, to defend any claim against it at the franchisee's sole cost and expense. The franchisee cannot enter into any settlement agreement or otherwise resolve the matter without Bumper Man's prior written consent. This obligation to indemnify Bumper Man continues even after the franchise agreement expires or terminates.
This means that as a Bumper Man franchisee, you bear significant financial responsibility for any legal claims or liabilities that arise from your business operations. You are not only responsible for your own actions but also for the actions of your affiliates and principals. This indemnification clause is a standard practice in franchising, designed to protect the franchisor from liabilities caused by the franchisee's business. However, the breadth of the clause, covering aspects like advertising and service performance, means franchisees must be vigilant in all aspects of their business operations to minimize potential risks.
Moreover, the franchisee's obligation to indemnify the franchisor extends beyond the term of the franchise agreement. This means that even after the agreement expires or terminates, the franchisee may still be liable for claims that arise from their past operations. This long-term responsibility underscores the importance of maintaining thorough records and adhering to all standards and legal requirements throughout the duration of the franchise agreement.