What is the dependency between a Buns On Fire franchisee's compliance with the franchise agreement and the franchisor's indemnification obligations?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchisor agrees to indemnify Franchisee against, and to reimburse Franchisee for, all direct damages, excluding consequential, punitive, or special damages, for which Franchisee is held liable in any proceeding in which Franchisee's use of any Mark pursuant to and in compliance with this Agreement is held to constitute trademark infringement, unfair competition or dilution, and for all costs reasonably incurred by Franchisee in the defense of any such claim brought against him or in any such proceedings in which he is named as a party, provided that Franchisee has timely notified the Franchisor of such claim or proceedings, has otherwise complied with this Agreement and has tendered complete control of the defense of such to the Franchisor. If the Franchisor defends such claims, the Franchisor shall have no obligation to indemnify or reimburse Franchisee with respect to any fees or disbursements of any attorney retained by Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire FDD, Buns On Fire agrees to indemnify franchisees against direct damages, excluding consequential, punitive, or special damages, for which the franchisee is held liable in proceedings related to trademark infringement, unfair competition, or dilution resulting from the franchisee's use of Buns On Fire's marks. This indemnification extends to all costs reasonably incurred by the franchisee in defending against such claims. However, this is conditional.
For Buns On Fire to provide indemnification, the franchisee must promptly notify Buns On Fire of any claim or proceedings, comply with all other terms of the Franchise Agreement, and tender complete control of the defense to Buns On Fire. If Buns On Fire assumes the defense, it is not obligated to cover fees or disbursements for attorneys retained separately by the franchisee.
In essence, a Buns On Fire franchisee's right to indemnification is contingent upon their adherence to the franchise agreement and their cooperation with Buns On Fire in the defense of any claims. Failure to comply with the agreement or to cede control of the defense could void Buns On Fire's obligation to indemnify the franchisee.