What costs are covered under the Indemnification fee for a Buona franchise?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Indemnification | Actual costs incurred by us. | As incurred | You must pay for us for any losses and expenses incurred in connection with any action, suit, proceeding, claim, demand, investigation, or formal or informal inquiry (regardless of whether the same is reduced to judgment) or any settlement thereof, which arises out of, or is based upon any of the items listed in the section of the Franchise Agreement labeled "Indemnification." |
Source: Item 6 — OTHER FEES (FDD pages 16–23)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the indemnification fee covers the actual costs Buona incurs due to specific situations related to the franchisee's business operations. Franchisees must reimburse Buona for any losses and expenses resulting from any action, suit, proceeding, claim, demand, investigation, or formal or informal inquiry, regardless of whether it leads to a judgment. This also applies to any settlement arising from items listed in the "Indemnification" section of the Franchise Agreement.
In simpler terms, if someone sues Buona because of something the franchisee did while running their franchise, the franchisee has to cover Buona's costs for defending itself. These costs can include legal fees, settlement payouts, and any other expenses Buona incurs as a result of the claim. The fee is due as these costs are incurred by Buona, meaning the franchisee will need to be prepared to pay these expenses promptly.
This type of indemnification clause is standard in franchise agreements. It protects the franchisor from liabilities arising from the franchisee's operations. However, it also places a potentially significant financial burden on the franchisee, as these costs can be unpredictable and substantial. Prospective Buona franchisees should carefully review the "Indemnification" section of the Franchise Agreement to fully understand the scope of their responsibilities and consider obtaining appropriate insurance coverage to mitigate this risk.