In the event of a claim related to the offering of securities or partnership interests of a Burger King franchisee, what recourse does BKC have if the franchisee fails to assume the defense of the matter?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) Franchisee agrees to defend, indemnify and save BKC and BKC's officers, directors, agents, employees, attorneys, and accountants, subsidiaries, Affiliates and parent companies, harmless of, from and with respect to any claims, demands, losses, obligations, costs, expenses, liabilities, debts or damages any of them may incur (including reasonable attorney's fees) arising from or relating to any offering of securities or partnership interests of Franchisee, including claims, demands, losses, obligations, costs, expenses, liabilities, debts or damages arising from or related to any alleged violation of any federal or state securities law in connection with any offering. BKC shall notify Franchisee of any claims, and Franchisee shall be given the opportunity to assume the defense of the matter. If Franchisee fails to assume the defense, BKC may defend the action in the manner it deems appropriate, and Franchisee shall pay to BKC all costs, including attorneys' fees, incurred by BKC in effecting such defense, in addition to any sum BKC may pay by reason of any settlement or judgment against BKC. BKC's right to indemnity under this Agreement shall arise and be valid notwithstanding that joint or concurrent liability may be imposed on BKC by statute, ordinance, regulation or other law. BKC and the other indemnitees shall, in all instances, have the right to be represented by counsel of its/their own choosing, at Franchisee's expense, and to participate in the defense of any such claim.
Source: Item 22 — CONTRACTS (FDD pages 125–127)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, if a claim arises from the offering of securities or partnership interests by a franchisee, the franchisee is responsible for defending and indemnifying Burger King Company (BKC). BKC will notify the franchisee of any such claims, giving the franchisee the opportunity to handle the defense.
However, should the franchisee fail to assume the defense, BKC reserves the right to defend the action in whatever manner it deems appropriate. In this case, the franchisee is obligated to pay BKC for all costs incurred in defending the action, including attorney's fees. Furthermore, the franchisee must cover any sums BKC pays due to settlements or judgments against BKC.
This indemnity extends even if BKC is found jointly liable under any statute or law. BKC has the right to be represented by counsel of its choosing, at the franchisee's expense, and to participate in the defense of any such claim. This clause ensures that Burger King is protected from liabilities arising from the franchisee's securities offerings and that the franchisee bears the financial responsibility for any related legal defense and settlements.