Does the Buns On Fire franchisee's indemnification obligation extend to the franchisor's subsidiaries and affiliates?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
13.6 Indemnification by Franchisee
Franchisee irrevocably and unconditionally agrees to indemnify, defend and hold the Franchisor and its subsidiaries, affiliates, stockholders, directors, officers, employees, agents and assignees harmless against, and to reimburse them for, any loss, liability, taxes or damages (actual or consequential) and all reasonable costs and expenses of defending any claim brought against any of them or any action in which any of them is named as a party (including, without limitation, reasonable accountants', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses) which any of them may suffer, sustain or incur by reason of, arising from or in connection with Franchisee's ownership or operation of the Franchised Business, which is due solely to Franchisee's negligence, breach of contract or other civil wrongs, unless such loss, liability or damage is solely and directly due to the gross negligence or willful misconduct of the Franchisor (or any of its
affiliates, i.e., any company controlling, controlled by, or under common control with the Franchisor) in producing, handling or storing the proprietary food items sold to Franchisee (provided Franchisor shall have established that Franchisee inspected such proprietary food items in accordance with the procedures stated in the Confidential Operations Manual and could not have reasonably discovered the adulteration or other defect in such proprietary food items which was the case of such loss, liability or damage). Franchisee acknowledges and agrees that any action or inaction by any third party (e.g., an independent carrier) which is not an affiliate of the Franchisor in connection with handling or storing the Products shall not be attributable to or constitute negligence of the Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire Franchise Disclosure Document, the franchisee's obligation to indemnify, defend, and hold harmless extends to the franchisor and its subsidiaries, affiliates, stockholders, directors, officers, employees, agents, and assignees. This means the franchisee is responsible for protecting these parties from losses, liabilities, taxes, or damages, as well as covering the costs of defending against claims or actions.
This indemnification applies to issues arising from the franchisee's ownership or operation of the franchised business, specifically if these issues are due to the franchisee's negligence, breach of contract, or other civil wrongs. However, there's an exception: the franchisee is not responsible if the loss, liability, or damage is solely and directly due to the gross negligence or willful misconduct of Buns On Fire or its affiliates in producing, handling, or storing proprietary food items sold to the franchisee.
It's important to note that the franchisee must have followed the procedures in the Confidential Operations Manual for inspecting these food items and could not have reasonably discovered any adulteration or defects. Additionally, any actions by third parties not affiliated with Buns On Fire, such as independent carriers, in handling or storing the products, are not considered negligence on the part of the franchisor. This section clarifies the scope of the franchisee's responsibility and provides some protection against liability arising from the franchisor's actions or those of unaffiliated third parties.